Only small businesses pay taxes. Big companies often pay nothing at all.
Think that’s an exaggeration? Look at a new report from Citizens for Tax Justice, a Washington, D.C. group. It finds that some of nation’s most famous brands have paid remarkably little to the government over the last five years. In fact, many actually enjoyed a negative tax rate: They received a nice rebate check from the U.S. Treasury.
The 15 giants highlighted by CTJ were chosen to represent a wide range of industries among Fortune 500 companies. They include CBS, Mattel, Prudential, and the California utility PG&E. Together, they paid no federal income tax in 2014, despite profits totaling $23 billion. CTJ’s point is that these companies are not anomalies, they are examples.
While the companies saved on their taxes, they must have paid plenty to accountants and tax lawyers, because to pay no tax you need plenty of help. The perfectly legal loopholes the companies exploited include “accelerated depreciation,” which involves taking the tax benefit of an asset that is declining in value up front rather than over time, and “active financing”–when companies claim that operations are part of foreign financing schemes, and therefore exempt from IRS scrutiny.
Most people agree that corporate taxation is broken, even the companies themselves. Congress has long discussed a quid pro quo of closing the loopholes in return for lower corporate tax rates.
CTJ calls that solution preposterous, as it would essentially reward borderline-immoral behavior.
“The revenues raised from eliminating corporate tax subsidies should not be given right back to corporations in the form of tax-rate reductions,” the report says. “Instead, as the vast majority of Americans understand, these desperately needed revenues should be used to address our nation’s fiscal problems and to make critically needed public investments in our nation’s future.”BS