No Taxation But So Much Representation – Brief Article
A new report reveals how some of the richest US corporations regularly avoid paying fair taxes.
According to Corporate Crime Reporter and the International Herald Tribune, a study conducted by the Institute on Taxation and Economic Policy, a Washington research organisation, examining the profits and federal incomes of 250 of the nation’s largest and most profitable corporations over the 1996/98 period, reveals that 41 companies paid less than zero in federal income taxes in at least one year. In those tax-free years, the 41 companies reported a total of $25.8 billion in pre-tax US profits.
Rather than paying $9 billion in federal income taxes at the standard 35 per cent rate, they enjoyed so many tax breaks that they received $3.2 billion in rebate cheques from the US Treasury! Texaco, for example, reported $3.4 billion in profits and $304 million in tax rebated over three years. In 1998, 24 corporations — almost one in 10 of the companies investigated — reported US profits before taxes of $12 billion for 1998, yet received tax rebates totalling $1.3 billion. Big corporations like Goodyear, Texaco, Colgate-Palmolive, Kmart, Enron, Pfizer, Pepsico and J P Morgan are amongst these.
The study found that tax breaks for the 250 companies lowered their taxes for a total of $98 billion in tax savings over the three years. General Electric (GE) topped the list with $6.9 billion in tax breaks. Companies used a variety of means to lower their federal income taxes, including accelerated depreciation write-offs, tax credits for oil drilling and ‘research’. GE for example, slashes its tax bills every year by ‘buying’ tax breaks from companies that have more than they can use. Annual reports filed by Microsoft and Cisco Systems indicate that they paid no federal income taxes in 1999 because stock options exercised by employees wiped out profit for tax purposes. Pfizer mc, Intel Corp, Bristol-Myers Squibb Co and GE also sharply reduced their tax rates through stock options.
Robert S McIntyre, a principal author of the report, said that ‘with significant help from Congress, corporations appear to be finding ways around the tax reforms’, and that these ‘findings will encourage lawmakers to re-examine this important area of taxation’.
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