Study: 30 top U.S. corporations paid no federal income tax

WASHINGTON, D.C. (Nov. 3) — A comprehensive new study that profiles 280 of America’s most profitable companies finds that 78 of them paid no federal income tax in at least one of the last three years. Thirty companies, including The Boeing Co., enjoyed a negative income tax rate over the three-year period, despite combined pre-tax profits of $160 billion. These are among the findings in “Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010,” released today by Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

Over the 2008-2010 period studied, the 280 companies earned nearly $1.4 trillion in pre-tax profits in the United States. Had all those profits been reported to the IRS and taxed at the statutory 35% corporate income tax rate, then the 280 companies would have paid $473 billion in income taxes over the three years. But instead, the companies as a group paid about half that amount as they took advantage of enormous corporate tax subsidies. Of the 280 Fortune 500 companies studied, Boeing’s $3.6 billion in tax subsidies over the three-year period ranked 7th biggest, behind Wells Fargo, AT&T, Verizon Communications, GE, IBM and Exxon Mobil.

“These 280 corporations received a total of nearly $223 billion in tax subsidies,” said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”

Corporations are lobbying for lower corporate rates and an exemption for profits they shift offshore. McIntyre, however, says: “Our study provides proof that too many corporations are already being coddled by our tax system.”

Findings in the report include:

• The average effective tax rate for all 280 companies in the study over the three year period was 18.5 percent; for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.
• 78 of the companies enjoyed at least one year in which their federal income tax was zero or less.
• 30 companies enjoyed a negative income tax rate over the entire three year period on their combined pre-tax profits of $160 billion.
• Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-2010.
• Wells Fargo tops the list of 280 U.S. corporations receiving the most in tax subsidies, getting nearly $18 billion in tax breaks from the U.S. treasury in the last three years.
• Pepco Holdings had the lowest effective tax rate of all the companies in the study, at negative 57.6 percent over the three year period.
• Some companies within sectors fare worse than others. For example, the report finds that FedEx paid a 0.9 percent tax rate over the three year period while its competitor, UPS, paid a 24.1 percent rate.
• While retailers and wholesalers in the study generally pay average effective tax rates of about 30 percent, Amazon.com paid a rate of only 7.9 percent on its $1.8 billion in profits from 2008-2010.
• Financial services received the largest share (16.8 percent) of all federal tax subsidies over the last three years. More than half of federal corporate tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas & pipelines.
• The top ten defense contractors saw their combined tax rate decline from 19.3 percent in 2008 to a mere 10.6 percent rate in 2010.
• U.S. corporations with significant (ten percent or more of their total worldwide profits) foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits.

Read the full report here.