Paul L. Caron
Dean



Thursday, November 3, 2011

CTJ: 30 of Fortune 500 Earned $160 Billion in Profits, Paid 0 Corporate Tax

Citizens for Tax Justice, Corporate Taxpayers & Corporate Tax Dodgers, 2008-10:

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 enjoyed a negative income tax rate over the three year period, despite combined pre-tax profits of $160 billion.

  • The average effective tax rate for all 280 companies in the study over the three year period was 18.5%; for the period 2009-2010 it was 17.3%, less than half the statutory rate of 35%.
  • 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.

CTJ

CTJ 2

Press and blogosphere coverage:

https://taxprof.typepad.com/taxprof_blog/2011/11/ctj.html

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Comments

It's pretty interesting that at least 78 of those companies enjoyed at one year or more without taxes. Great report and study!

Posted by: Spencer Hale | Nov 3, 2011 2:37:40 PM

It is an interesting study. Directionally CTJ gets it right. But this study could have been a lot more persuasive, had CTJ spent less time on atmospherics and a lot more time explaining the exact sources of its data, possible inconsistencies in that data from one company to another, possible reasons for such inconsistencies, and how CTJ controlled for those inconsistencies in arriving at the reported results of the study.

Posted by: Jake | Nov 3, 2011 3:48:18 PM

(See for a http://www.taxfoundation.org/blog/#27752 for a reality-check.) In essence: If you can get past the bias in the selectivity of the sampling (time and companies) and what it chooses to ignore (foreign income and other taxes)and to highlight (the user of the loophole instead of the creator), doesn't this article make the point that the corporate tax code may need an overhaul? Sadly, all the hype being built in the study and the headlines may only lead some to say: Just impose some kind of a retroactive, real time, asset based tax, whatever, that will produce the "missing US taxes" as opposed to ask why are they "missing".

Posted by: MG | Nov 4, 2011 5:51:36 AM

Can someone explain why corporations claiming capital depreciation is a bad thing? It amounts to deferring taxes until later. The CTJ says "oh, but they can just do this indefinitely." Yes, and thus the cycle of continuous investing in the economy begins. We can do without tax subsidies, but allowing depreciation claims encourages investment.

Just because Bush was for it doesn't mean it is a bad idea.

Posted by: Micah Warren | Nov 4, 2011 7:39:04 AM