Legislation adopted in 2002 and 2003, created “accelerated depreciation” loopholes that made it easier for corporations to be recipients of tax rebate checks from the U.S. Treasury, which amounted to $175 billion. The legislation was intended to subsidize corporate investments in new facilities and equipment, but the report failed to find any evidence of any such investment in this regard in 2003. In fact the opposite occurred, the top 25 companies which obtained the most cash, cut their total property, plants, and equipment by 27 percent from 2001 to 2003. The remaining 250 companies listed in the report cut such investments by 8 percent. During the same period the corporations organized by industry (telecommunications, petroleum and pipelines, transportation, gas and electric utilities, electronics) reduced their investments by 22 percent.
The impact of diminishing taxes impacts government’s ability to deliver certain services to society, and as a consequence tax rates for the general public may have to be increased, while at the same time such services will certainly be forced to be cut back. The effects of the shortfall will percolate down to State governments, which receive federal grants and subsidies. State’s will conceivably be forced to cut back or eliminate subsidies to municipal and county governments. While multi billion dollar corporations suck up the profits at the expense of society, the weakest, and least economically fit, will certainly pick up the tab.
A copy of the 68 page report can be found at www.ctj.org or at www.itepnet.org Citizens for Tax Justice and the Institute on Taxation and Economic Policy have analyzed corporate profits and corporate income taxes in a series of reports dating back to the 1980’s.
L.M. / Contributing Correspondent
Posted October 1, 2004
URL: www.thecitizenfsr.org SM 2000-2004