Public Intelligence

A table from the Citizens for Tax Justice study indicates that most major U.S. defense contractors pay taxes well bell below the standard corporate rate. Boeing, for example, has paid no taxes for three years straight.

Biggest Public Firms Paid Little U.S. Tax, Study Says (New York Times):

Warren E. Buffett, take note. It is not just a few wealthy individuals paying unusually low taxes to the federal government. Corporate America is not far behind.

A comprehensive study released on Thursday found that 280 of the biggest publicly traded American companies faced federal income tax bills equal to 18.5 percent of their profits during the last three years — little more than half the official corporate rate of 35 percent and lower than their competitors in many industrialized countries.

Mr. Buffett, the billionaire investor, has said that the tax code is unfair, allowing him to pay just 17 percent in federal taxes last year, about half the percentage his secretary paid.

The corporate study, prepared by the left-leaning advocacy group Citizens for Tax Justice, examined the regulatory filings of the companies to compute each year’s current federal taxes. Some of the companies disputed the findings, saying that the study understated their tax payments by omitting deferred taxes that they may pay in future years.

Using information from the companies’ own corporate filings, however, the study concluded that a quarter of the 280 corporations owed less than 10 percent of profits in federal income taxes and 30 companies had no federal tax liability for the entire three-year period.

The report is being released as corporations are pushing for a cut in their official tax rate, saying the current system puts American companies at a disadvantage with competitors abroad and encourages them to shift jobs and investments overseas.

The Congressional supercommittee charged with cutting the budget deficit is also considering proposals to revamp the tax system, simplifying the corporate structure and possibly lowering corporate rates.

The study said that the shelters and loopholes in the current tax system rewarded companies that aggressively avoided taxes at the expense of those that did not. A quarter of the companies in the study had a federal tax bill of 35 percent of their profits, while a similar number had an effective rate of less than 10 percent.

“Companies that are paying their fair share ought to demand that the tax-dodging companies pay their fair share too,” said Robert S. McIntyre, the author of study. “So should the public, which is subsidizing them in terms of increased federal debt.”

The report is based on data gleaned from the companies’ regulatory filings, which can be different from their corporate tax returns. Even in a year when a company claims an overall tax benefit, it may pay some cash taxes while accumulating credits that can be redeemed in future years. But because most corporations do not release their tax returns, these corporate regulatory filings offer the best publicly available gauge of what companies pay and what strategies they use to reduce their tax bills.

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

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