Corporate Tax Dodgers Paid 17.3 Percent

MoneymanA study of 280 Fortune 500 corporations from the Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) calculates their average effective tax rates — for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.

The three-year study revealed 78 of the companies enjoyed at least one year in which their federal income tax was zero or less. Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-2010. 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. Amazon.com paid a rate of only 7.9 percent on its $1.8 billion in profits from 2008-2010.

According to the Congressional Budget Office, U.S. taxes on corporate income as a percentage of Gross Domestic Product are the lowest of all the OECD countries. Personal income taxes made up 36 percent of U.S. tax revenue in 2006, more than in most other OECD countries.

  1. #1 by brewski on November 3, 2011 - 4:02 pm

    It’s truly amazing how much effort one can spend on being verifiably wrong.

  2. #2 by Richard Warnick on November 3, 2011 - 4:10 pm

    brewski– You could argue that this study proves you are correct about high statutory rates encouraging corporate tax dodging.

  3. #3 by brewski on November 3, 2011 - 4:33 pm

    There are a lot of important points:
    1. Our Congress has granted lots of tax loopholes and subsidies always with some noble sounding purpose such as renewable energy, farming, low income housing, jobs, blah blah blah. So one could easily not blame corporations for following the law as much as blame Congress for making the law with so many subsidies.
    2. Raising rates on a system with loopholes is not as productive as closing loopholes. 35% x $0 = $0
    Focus on the $ and not the %
    3. Corporations are profit maximizing creatures and if you incentivize them to push money overseas, they will.
    4. If the US has the highest statutory rates and the lowest effective rates, that should tell you something. That means that other countries have lower statutory rates and higher effective rates. So if you want to raise your effective rates, do what they do.

  4. #4 by Andrea on November 3, 2011 - 6:55 pm

    About 50% of business income in the US is taxed at the individual level. In previous decades that was not the case. Most countries do not allow corporate profits to be “passed through” to the individual level for tax purposes. The CBO study does not account for this. That explains why our corporate income tax burden as percent of GDP is lower than others and why federal government share of revenues from individual income taxes has increased.

  5. #5 by Andrea on November 3, 2011 - 6:57 pm

    So if the effective tax rate is less than the nominal tax rate, that constitutes tax dodging? For individual income taxes, effective tax rates are almost ALWAYS lower than the taxpayers’ top marginal rate due to deductions, credits, and taxation of income at lower brackets.

  6. #6 by Shane Smith on November 3, 2011 - 9:39 pm

    brewski :
    It’s truly amazing how much effort one can spend on being verifiably wrong.

    Voice of experience right there…

  7. #7 by Ronald D. Hunt on November 4, 2011 - 1:52 am

    “That means that other countries have lower statutory rates and higher effective rates.”

    So your ready to sign onto the policies that allows them todo that now are you?, You know Nationalized health care, resource extraction industries, expand SS, and rest of the welfare state functions that Europe and many Asian Nations enjoy!!! To say nothing of direct industrial policy, a Sovereign wealth fund, etc and so forth.

  8. #8 by brewski on November 4, 2011 - 8:46 am

    RDH, you are mixing apples and oranges. Other countries have higher effective tax rates from their corporate income tax with lower statutory corporate incomes tax rates. This has nothing to do with your hobby horses of sovereign wealth funds blah blah blah.

  9. #9 by Ronald D. Hunt on November 4, 2011 - 10:31 am

    “This has nothing to do with your hobby horses of sovereign wealth funds blah blah blah.”

    This has everything todo with the “hobby horses” as you put it, All of those “loop-holes” do things, they pay for health care, retirement, promotion of industry, etc and so for. The “hobby horses” are the replacement policy for those tax policies you advocate the ending of!

  10. #10 by brewski on November 4, 2011 - 10:50 am

    I am advocating a tax system which collects more revenue more efficiently. One is not dependent on having a sovereign wealth fund to do that.

  11. #11 by Ronald D. Hunt on November 4, 2011 - 11:08 am

    You keep pointing out European tax systems for your examples, nationalized health care, nationalized pension funds, direct support of industry, nationalized resource extraction industries etc and so forth is how they have such a system.

    Their systems have alot fewer loop holes then our system as a direct result of the mentioned items above, And you can’t have it both ways, dump the deductions, credits, loop-holes, etc requires policy that can otherwise replace the functional part of those deductions, credits, and loop-holes, etc.

  12. #12 by brewski on November 4, 2011 - 11:18 am

    So it is necessary to have nationalized resource extraction industries in order to not have a corporate tax code with millions of loopholes?

    Fascinating.

    I thought all you needed to do to close loopholes was to close loopholes. I didn’t realize you also need to nationalize private industries.

  13. #13 by Ronald D. Hunt on November 4, 2011 - 12:03 pm

    those loop-holes do things, pay for peoples health insurance, funds their retirement plans, is used to encourage new business investment(depreciation rules), helps our farmers be competitive with the highly subsidized European farmers, encourages research, provides for rural electrification and telephone services(FUSF isn’t the only tool for this), etc and so forth.

    It is not fine to simply toss another 50million people off of their insurance policies, and no its not fine to have 50 million people lose their 401k benefits, etc and so forth.

    It isn’t something so simple as that you can throw 1 liners at it, it is a complicated set of issues that have to be addressed.

    Ending the loopholes around health care will raise the cost of a private insurance plan by at least $10,000 dollars per year, ending the loopholes for retirement plans will heavily reduce participation in retirement savings and long run will be a net disaster as a greater number of people depend solely on SS. Ending the depreciation rules for equipment purchases will delay factory upgrades and slow business. Ending many business subsidy programs will put us at a vast disadvantage to foreign businesses who will continue to be subsidized.

    Our trade policy causes many of the problems to be worse, moving towards fair trade would make it easier to phase out many of our business subsidies.

    How we pay for these policy changes, how do we phase them in, what is the most efficient way doing them?

    And the resource extraction industries should be nationalized both for the profit and for the benefits to environmental policy that could be had from halting certain types of extraction that are extraordinary messy(Mountain top removal, fracking, etc), to say nothing of funding the 200 or so super fund sites that need to be cleaned up that have been left behind by corporations that oddly have a nack for going bankrupt just after the mine runs out(odd that).

  14. #14 by brewski on November 4, 2011 - 12:18 pm

    The loopholes are all about corruption. Favored and powerful groups extort favors from politicians in return for money and support. That is why they call them lobbyists. They tell you it is about food and healthcare, but that is all a ruse. It is about high fructose corn syrup, non-negotiated drug prices, tax avoidance, etc.

    If nationalization of resources were some huge advantage then Nigeria would be rich and South Korea and Japan would be poor.

    Alberta’s oil is being privately developed and not by the state.

    You are dead wrong about health insurance. The subsidies cause the our health insurance to be more expensive, not cheaper. Yes it is complicated, and you seem to not understand how this works.

  15. #15 by Ronald D. Hunt on November 4, 2011 - 12:48 pm

    Nigeria has other problems. I suggest looking at Norway, Germany, or France.

    I am right about health insurance, the subsides let more people in, and this is a case where more == cheaper. its an adverse risk curve, the more it costs the less people will have it, the less people who have it the more it costs(what a conundrum). Their is a reason we cost double the next closest nation, not everybody is in.

    Many corruptions grow out of the lack of a universal system, hospitals coming up with bogus extra charges to pay for the 20%(45% under your tax plan) of their business that is uncompensated, doctors having to hire 4 administrative personal for just insurance billing, hospitals having 1 administrative person per bed just for insurance billing, etc.

    The only alternative that was ever provided as a “market” solution, CDHP(consumer drive health plans) such as high deductible plans, have been all but given up on by the industry because they are eating themselves out on costs from untreated conditions that are allowed to get out of hand(and passed the deductible line for treatment). These types of plans only work for people with the necessary expendable income to afford them and yet still pay 60-70% the cost of what a comprehensive plan would have cost, Ohh and CDHP suffer high price inflation then comprehensive plans.

    “The loopholes are all about corruption”

    Hell yes their corrupt as hell, That doesn’t change the fact that they do things. Our health care, retirement, industrial policy etc and so forth are all built around our tax policy.

    “non-negotiated drug prices”

    Not tax policy their, bigger problem is how drug re-importation is disallowed anyway, if you want to go after that as a cost problem. This particular issue is another reason why a nationalised insurance pool would be a great cost saver.

  16. #16 by cav on November 4, 2011 - 12:57 pm

    As things get more and more complicated, fewer and fewer of us can comprehend them. This indicates a seemingly necessary trust in experts and other ‘serious’ folk who never fail to assure us that we fail to understand, have not a clue. And trusting them – whatever their politics – will be required.

    What could possibly go wrong.

  17. #17 by brewski on November 4, 2011 - 2:08 pm

    the subsides let more people in, and this is a case where more == cheaper.

    If employers were allowed to give you as part of your overall compensation package a car, and the value of the car would be tax free, what do you think would happen?

    So people and companies would figure out that it seems like a good idea for the employer to lower your cash salary and to give you a car, since you have to pay tax on your salary and not on your car. But if you had to buy a car with after tax cash, then you would have had to already pay tax on that cash. So everyone would love to have their employer provide them with a car in lieu of some portion of cash.

    Then people would realize that whatever value of car that they got wouldn’t cost them a penny more in taxes, so why not ask for a better car than they would otherwise buy themselves. After all, it isn’t their own money they are buying the car with AND they don’t have to pay tax on it. So let that process run out for, say, 70 years. So what would you expect?

    The total demand for cars and the total demand for really expensive cars would be much higher than if this subsidy has never been thought of in the fist place. Sure probably more people have cars overall. But what we would end up would a world of subsidized expensive high end tax free cars.

    So no, it does not make things cheaper.

  18. #18 by Ronald D. Hunt on November 4, 2011 - 2:49 pm

    A car is a bad comparison, For one thing the quality of the car has no effect on worker productivity as long as it gets from point a to point b. Cars are vastly easier to repair, and are easily and cheaply(comparably to a human life) to replace.

    The quality of health care has giant effects on worker productivity, its not a luxury item everyone has to have it.

    People are not getting better and better care every year, its getting worse and worse every year.

    Car ownership does not suffer from a adverse risk feedback loop when to few own one, in fact fewer people owning them would reduce the cost of insurance.

    Health care is expensive due to uncompensated care, new technology, emergency care, and private administrative costs related to a multi payer privately ran system, not due to insurance subsidies provided via the tax system.

    The demand for healthcare is the nearly the same no matter how little or much it is subsidised. The only difference is in the size of the risk pools and quantity of cost shifting to those who run risk pools. People don’t go and get sick because treatment goes on sale, health care just simply doesn’t function like other markets. Stop subsidising children’s vaccines and watch you savings and more burn up due to the spread of disease. End medicaid and watch the same number of people show up at emergency rooms with broken arms.

    Employers use their buying power to obtain better rates on insurance as well, its not just a matter of the subsidy itself buying the insurance, its a matter of the economies of scale. IBM, HP, Microsoft have a much easier time negotiating good rates for insurance then anyone one person will on their own. And the individual market bears the reality out, as individual plans are 30%-70% more expensive then group plans, and group plans typically have lower administrative costs associated with them as well.

    This is how it works Brewski, This is reality.

  19. #19 by brewski on November 4, 2011 - 3:47 pm

    You are half right.

    Health care is expensive due to uncompensated care, new technology, emergency care, and private administrative costs related to a multi payer privately ran system,

    Yes, this is a huge part of it.

    not due to insurance subsidies provided via the tax system.

    Yes it is.

    The demand for healthcare is the nearly the same no matter how little or much it is subsidised.

    No, the key here is to understand that when you speak of “health care” you are talking as though it is one fixed thing, when in fact we have choices as to HOW MUCH health care we receive and WHAT KIND of healthcare we receive.

    We could easily lower our health insurance costs if we all chose to forgo coverage for all kinds of coverage we receive today. We could drop infertility coverage, impotence (Viagra coverage), some Amzheimer’s coverage (see Canada and UK), etc. We could drop virtually all branded drugs (see Kaiser Permamente). We could eliminate all private and semi-private rooms in hospitals and build all our hospitals to be more like dorms. [I was in the cardiac ward of IMC and they only built private rooms and the whole building is like a palace with Italian tile and indoor palm trees]. So would could easily choose to lower our healthcare costs substantially, but if our employer pays for it and it is tax free then why not give everyone the equivalent to a Lexus? So yes, it is very analogous to a car.

    The only difference is in the size of the risk pools and quantity of cost shifting to those who run risk pools.

    Nope, there is also the QUANTITY of the health care we receive and the PRICE at which we receive it.

    That is called microeconomics.

  20. #20 by Ronald D. Hunt on November 4, 2011 - 4:27 pm

    “when in fact we have choices as to HOW MUCH health care we receive and WHAT KIND of healthcare we receive.”

    So you going to break your arm next week to get in on the savings the hospital is offering on their 50% off broken arm treatment save next week?

    “We could drop virtually all branded drugs”

    So are you suggesting we nationalise drug distribution todo this, heavily regulate who your insurance company can buy from, or perhaps pretend the market will eventually do it on its own?

    “when in fact we have choices as to HOW MUCH health care we receive and WHAT KIND of healthcare we receive.”

    Private industry already regulates this to such an extent as to be a moot point. My parents already have $60 co-pays to see an in network doctor and a $3000 dollar deductible(per person)and a 30% co-insurance. Their insurance bill still close to $540 dollars per month.

    In fact costs from neglected care are eating out these consumer drive plans that encourage people to grin and bear it. I believe I pointed this out before.

    Driving people away from entry level care is a plan for disaster.

    Health care is a problem involving Both Microeconomics and Macroeconomics.

    As the adverse risk of coverage increases the worse the situation will get.

  21. #21 by brewski on November 5, 2011 - 11:00 am

    You are undermining your credibility. The typical employer provided health care in the US such as from IHC, covers many things not covered by “universal” health care in places like Canada and the UK. We get far more tests, far more drugs, far more doctor visits, and far more branded drugs than they do. So yes, there are choices about HOW MUCH and WHAT KIND of health care we receive and how much it costs. Your assumption that health care is some fixed amount and fixed price service and that increases in demand don’t affect prices shows that you have no clue what you are talking about. Do some homework and get back to me.

  22. #22 by Ronald D. Hunt on November 5, 2011 - 3:18 pm

    nonsense, Japan’s system costs a quarter of what ours does and they receive 4 times as many MRI scans as we do, No not per capita, 4 times more then we do as a simple total count(they have about a third of the population we do).

    France has a similar system, in that often health coverage is provided by the employer, in addition to the national public option, and the minimum coverage offered to everyone. The only area of coverage that is inferior to ours to cancer care.

    “We get far more tests, far more drugs, far more doctor visits, and far more branded drugs than they do.”

    We only get more drugs, tests their are several Nations that get more of those and yet are still less then half of what we spend(Taiwan, France). We get far fewer doctor visits then Japan, France, Taiwan, and yet spend 2 to 4x as much as those nations.

    We exclude 50 million people from coverage entirely, spend a third of every dollar on profit and administration, and have enormous cost shifting obfuscating the real cost of care because 20% of doctor and hospital business is uncompensated.

    Yes drug patents are a bitch, I get it you don’t like the abuses going on their preventing generics getting to the market. We don’t need to denie grandma her Alzheimer pills, just allow drug reimportation.

    Also France and Canada don’t need to cover many types of medications because their drug market works differently(its nationalized!!!!), In Canada a months regiment of Viagra is $5, hardly worthy point of comparison.

  23. #23 by San Juan Bautista on November 5, 2011 - 4:32 pm

    Tell you what Ronald, right now Reactor 2 has hit the water table, and is live… the Japanese are planning to burn a million tons of radioactive waste, contaminated items, and are not taking even simple measures to protect their people. Tokyo is at risk, and a new city is being built 300 miles away to become the new capital. What is happening in beyond belief, but the story is entirely out of the news..health care in Japan? Don’t make me laugh, as given the circumstances of denial now going on in that country, it is impossible to laugh..

  24. #24 by Ronald D. Hunt on November 5, 2011 - 6:45 pm

    A private enterprise screwing over an entire Nation and not caring no bit about it…. color me not shocked. At this point their is not a whole hell of a lot the Japanese can do about the situation, moving important infrastructure away, and moving population away is about all they can do. And to be frank your talking out your backside, The Xenon detection method used has a pretty high false positive rate and the detection has not been continuous. The reactor containment building extended below the water table so the water in the water table is not contaminated with any reactor material yet,(mind you open discharge of ocean water coolant might be down their with some less then friendly things in it, note however that Uranium is naturally occurring in ocean water as well tho). And I suffer higher levels of radiation from my grandparents granite kitchen counters then the average person in Tokyo will be at risk from the accident their.

    The reactor material that melted and collected in the bottom of the building also absorbed a lot of concrete diluting it heavily, some of the chemicals pumped into the building also have an effect on its react-ability.

    It might take a few years for the reactor to cool enough to collect the remaining fuel rods, but once their out of the way they will be able to collect the melted materials as well. Unlike Chernobyl where the entire reactor core melted and has stayed hot enough to not yet be collectable(also their coolant was made from a graphite stack… graphite is explosive at high temperatures), tho a portion of the reactor core was airized and spread around in the explosion further complicating attempts to collect it.

    http://xkcd.com/radiation/

    It is a shame that radiation is so misunderstood. It should be respected not feared

    I pointed out more nations then just Japan.

  25. #25 by brewski on November 5, 2011 - 9:24 pm

    So are you suggesting we nationalise drug distribution todo this, heavily regulate who your insurance company can buy from, or perhaps pretend the market will eventually do it on its own?

  26. #26 by San Juan Bautista on November 5, 2011 - 9:58 pm

    Well believe what you wish, the folks I know who actually ran reactors have a different opinion. Time will tell won’t it? There is plenty that the Japanese government is not doing, they are in denial, and making big mistakes in managing the problem. Nobody argues that.

  27. #27 by cav on November 6, 2011 - 12:04 am

    I read recently about major quantities of flotsam circulating in the Pacific that all came from the tsunami. It’s probably going to start washing up in Hawaii, and later upon the mainland of Canada and the U.S. – probably sometime in 2014. Now considering what a slosh the oceans are, and how the Jet Streaming through the atmosphere pretty much proceeds from there to here, I have to believe a good deal of fall-out has been reaching our shores since, oh, about a week after the catastrophe. IOW: It’s not just the government of Japan that’s capping the news of such issues.

  28. #28 by Ronald D. Hunt on November 6, 2011 - 3:03 am

    Takes 6-8 days for jet stream to move air from Japan to US, That amount of time is key in understanding how little of a problem it is for us. Not only does the material get dispersed very finely diluting into the range of parts per hundred trillion in the air, but all of the really nasty stuff, that is all the short lived stuff will have nearly entirely decayed.

    Generally speaking the more radioactive something is the shorter its half life is, for example about 3% of the potassium you eat is a radioactive isotope but its half life is extremely long and just isn’t substantially a problem. Or the Xenon they may have found has a half life of 9 and a half hours it decays quickly and so is pretty nasty stuff.

    The type of radiation makes a lot of difference as well, for example handling Weapons grade uranium can quickly lead to radiation disease if unprotected(hell even being near it), but handling Weapons grade plutonium so long as none of it is ingested is for the most part safe. The plutonium ore used in the second nuclear weapon dropped on japan for example was left on the table in the new Mexico desert lab because it could study safely without extensive protections(mind you someone dropped a hammer on it once and cause a sub critical event that did kill someone).

    Brewski,

    Limit drug patents to 7 years, And creation National negotiation authority to set drug prices. And their should be a law that we will never pay more then 5x’s the high rated charged to any OCED Nation. Structural separation between drug research and drug manufacture could help here, most drug research is bankrolled by the Government anyway so we should get something out of it.

  29. #30 by Ronald D. Hunt on November 6, 2011 - 11:52 am

    That translation is really bad fyi(i can read a bit of Japanese, mind you i use an ofurigana plugin because i don’t yet know enough of the kanji’s). And yes their will be hot spots for a good distance, they will have to remove the top 2-3inches of soil for a 50km radius due to mostly cesium.

    But see that is the difference between their situation and Chernobyl, because they will eventually be able to remove the core materials they will be able to recover from this.

    Your Toronto link’s source removed their information from the internet, so I have to wonder how full of crap it is. perhaps they got their single point of data by testing next to someone receiving cancer radiotherapy.

    You understand their is more fallout material floating around in the atmosphere from the multiple thousands of open air nuclear weapons tests have have been doing sense the 1940′s then all of the worlds nuclear power plant accidents combined right? And you have been exposed to this for years and years and years. To say nothing of the naturally occurring uranium in southern Utah soil, massive amounts of radon gas in northern Utah, or the material in your glow in the dark watch!!!!!!!!!!!!!

  30. #31 by cav on November 6, 2011 - 9:31 pm

    Taxes are how we all pitch in to enjoy the benefits and protections of modern society. Those benefits and protections are what enable people to become wealthy,

    14 Ways A 90% Top Tax Rate Fixes Our Economy And Our Country.

    http://www.ourfuture.org/blog-entry/2010041625/13-ways-90-percent-top-tax-rate-fixes-economy

  31. #32 by brewski on November 6, 2011 - 10:31 pm

    1 Way that a 90% tax rate would end life as we know it.

    1. All money would leave this country and go someplace else that didn’t have a 90% tax rate, like Canada, France, Germany, UK, ummmm….every other country on the planet not named the formers United States of America.

  32. #33 by cav on November 7, 2011 - 7:23 am

    Twp issues:

    Life as we know it = status quo. Ask 99 out of 100 about how well that’s been working out – perhaps ‘life as ‘we’ know it’, at least from an econ perspective, could be a bit more inclusive – or at least not so divisive.

    Of course, there’s always the possibility of making these adjustments ‘temporary’ – just like the Bush tax cuts. Any way, don’t all the ‘really’ progressive economies simply follow our lead, or respond to our threatening? It’s not like we own the planet or anything.

  33. #34 by brewski on November 7, 2011 - 8:52 am

    The life as we know it which has not been working out so well was caused by the government, and the solution is for more government? Nice analysis.

  34. #35 by cav on November 7, 2011 - 10:10 am

    That reading comprehension problem really should be attended to.

    But as Greg Sargent notes this morning, there was one quote from a top Republican official that “neatly captures what all this is really about.”

    To hear GOP leaders put it, undermining workers’ rights is necessary because of the state’s budget shortfall — by curtailing collective-bargaining rights, Ohio can cut the salaries of school teachers, for example. For labor and their Democratic allies, the follow-up question is one about shared sacrifice — if teachers’ taxpayer-financed salaries should be cut, maybe politicians’ taxpayer-financed salaries should see a decrease, too.

    The right doesn’t see it that way.

    In a recent interview, a top Ohio Republican defended this in a curiously belligerent way, one that may reverberate in the race’s final days: He claimed lawmakers don’t need to take a pay cut in the spirit of shared sacrifice, because “I earn my pay,” adding: “Republicans earn their money.”

  35. #36 by cav on November 7, 2011 - 10:25 am

    IOW: Obstructing any Democratic progress is ‘hard (and lucrative) work”

  36. #37 by cav on November 8, 2011 - 7:56 am

    Our most important problems can only be solved by collective action — new policies and laws taken by government. That requires that we act, above all, as citizens. I have watched over the past 40 years as nearly every important institution in our society has gradually shifted to encouraging us to see ourselves as individuals and consumers as opposed to group participants and citizens. We are all aware of this in advertising, but it has also become a powerful trend in education and in government itself. We are encouraged to believe that we can bring the changes we need by exercising our “consumer vote” in the marketplace more effectively than by exercising our citizenship — not just in voting, but also in public debate, in participating in political parties, in the exercise of our professional judgment, in educating our children, in participation in labor unions and professional associations, in speaking out in our communities. Our “vote” through marketplace purchases can only bring about very limited change, and by thinking of ourselves more as consumers than as citizens we diminish our very dignity as human beings.

    http://www.commondreams.org/view/2011/11/08-1

  37. #38 by cav on November 8, 2011 - 6:47 pm

    Corporations ARE in power now. That’s just a fact. Some have taken on feudal roles, some have not, except for the plundering role.

    Re the 4th Circuit opinion:

    “The right to be free from federal regulation is not absolute and yields to the imperative that Congress be free to forge national solutions to national problems.”

  38. #39 by brewski on April 29, 2012 - 4:34 pm

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