Major U.S. Corporations Paid No Taxes

A recently compiled investigative report underscores that major corporations in the United States are paying fewer taxes, leaving the country with an emerging problem on how to make up a growing shortfall. Between 2001 and 2003, eighty-two of the largest American Corporations paid no taxes whatsoever, and some enjoyed multiple year zero tax advantages. Yet these same companies declared $102 billion in pre-tax profits. The report prepared by Citizens for Tax Justice, jointly with the Institute on Taxation and Economic Policy, shows a glaring example of how the most powerful and richest corporate entities in the United States are profiting by the policies of the Bush administration. Number one on the list is General Electric with $9.5 billion in tax breaks from 2001-2003, Citigroup is third with $4.7 billion in the same period, and Phillip Morris, also on the list, enjoyed $3.3 billion in that two year period. The report further details the top 275 U.S. corporations, were successful in sheltering more than half of their profits from any taxation.

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