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The state of corporate taxes

Staff writer ▼ | February 28, 2014
Profitable corporations are supposed to pay a 35 percent federal income tax rate on their U.S. profits but many pay far less, or nothing at all, according to Citizens for Tax Justice (CTJ).
Dollars
DollarsProfitable corporations are supposed to pay a 35 percent federal income tax rate on their U.S. profits but many pay far less, or nothing at all, according to Citizens for Tax Justice (CTJ).


The report looks at the profits and U.S. federal income taxes of the 288 Fortune 500 companies that have been consistently profitable in each of the five years between 2008 and 2012, excluding companies that experienced even one unprofitable year during this period.

As a group, the 288 corporations examined paid an effective federal income tax rate of just 19.4 percent over the five-year period — far less than the statutory 35 percent tax rate.

Twenty-six of the corporations, including Boeing, General Electric, Priceline.com and Verizon, paid no federal income tax at all over the five year period. A third of the corporations (93) paid an effective tax rate of less than ten percent over that period.

Of those corporations in our sample with significant offshore profits, two thirds paid higher corporate tax rates to foreign governments where they operate than they paid in the U.S. on their U.S. profits.

One hundred and eleven of the 288 companies (39 percent of them) paid zero or less in federal income taxes in at least one year from 2008 to 2012.

The sectors with the lowest effective corporate tax rates over the five-year period were utilities (2.9 percent), industrial machinery (4.3 percent), telecommunications (9.8 percent), oil, gas and pipelines (14.4 percent), transportation (16.4 percent), aerospace and defense (16.7 percent) and financial (18.8 percent).

The tax breaks claimed by these companies are highly concentrated in the hands of a few very large corporations. Just 25 companies claimed $174 billion in tax breaks over the five years between 2008 and 2012. That’s almost half the $364 billion in tax subsidies claimed by all of the 288 companies in our sample.

Five companies — Wells Fargo, AT&T, IBM, General Electric, and Verizon — enjoyed over $77 billion in tax breaks during this five-year period.


 

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