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Friday, July 29, 2011

Corporate America Untaxed: Tax Avoidance on the Rise

Greenlining Logo The Greenlining Institute yesterday released Corporate America Untaxed: Tax Avoidance on the Rise. Here is the Executive Summary:
  • In 2010, U.S. corporations avoided approximately $60 billion in U.S. corporate income taxes by using a variety of devices and gimmicks to shift profits to foreign subsidiaries, while the Fortune 100 companies received some $89.6 billion in federal contracts.
  • Since the GAO reviewed this issue in 2008, top companies have added 44 new subsidiaries in countries identified by the GAO as tax havens.
  • The lost revenue would be more than enough to fund the entire budgets of the Environmental Protection Agency and the Departments of Energy and Labor combined.
  • One recent study found that eight of the top 12 companies effectively paid no federal income taxes from 2008 through 2010. In 2010, General Electric paid no federal income tax.
  • The official U.S. corporate tax rate of 35% largely exists in name only. The U.S. collects less in corporate taxes as a share of GDP than 24 out of 26 industrialized countries.
  • The share of the federal budget funded by corporate income taxes has dropped dramatically since the 1940s, from 28.8% of the budget to 10.3%.
  • Of the 77 Fortune 100 companies with subsidiaries in tax haven countries, 69 had federal contracts. The largest in terms of dollar amounts was General Dynamics, with nearly $15 billion in federal contracts and 14 subsidiaries in tax haven or financial privacy jurisdictions.
  • The pharmaceutical and tech sectors loom particularly large, including Merck, Pfizer, General Electric, Dell and Google. G.E., paying essentially no federal tax, had over $3 billion in federal contracts.
  • Google’s “Double Irish Dutch Sandwich” illustrates the convoluted mechanisms used to hide profits overseas. Many other strategies are also used.

(Hat Tip: Corporate Counsel.)

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