Get PJ Media on your Apple

Corporations Should Pay More, Coburn and Levin Conclude from GAO Report

Loopholes mean tax burden "is shifted onto hardworking American families and small business,” Republican senator says.

by
Bill Straub

Bio

July 6, 2013 - 12:20 am
Page 1 of 2  Next ->   View as Single Page

WASHINGTON – The Government Accountability Office found that major U.S. companies aren’t making tax payments that amount to anything close to the 35 percent statutory corporate rate, considered the highest in the world.

According to the GAO, profitable U.S. corporations with at least $10 million in assets paid an average effective federal tax rate of 12.6 percent, just a bit more than one-third of the statutory rate, as a result of various deductions and protections found in the Internal Revenue Service code. Multinational corporations paid an effective rate of about 16.9 percent when state, local and foreign taxes were taken into account.

Tax reformers, including President Obama, have consistently called for a lowering of the 35 percent rate, citing it as contributing to a sluggish economy. But the GAO may give new impetus to efforts to enhance corporate tax deposits into the federal Treasury.

Corporate tax contributions have fallen steadily over the years, from 32 percent of federal tax revenues in the 1950s to 9 percent today. At the same time U.S. corporate profits have reached an all-time high. Despite corporations’ growing share of income, GAO reported that in 2012 corporate income taxes contributed only about $242 billion to federal tax receipts, while individual income taxes contributed nearly five times more at $1.1 trillion.

In a 2008 report, the GAO determined that nearly 55 percent of all large U.S firms reported no federal tax liability in at least one year between 1998 and 2005.

Sen. Carl Levin (D-Mich.), former chairman of the Senate Permanent Subcommittee on Investigations, who requested the report along with Sen. Tom Coburn (R-Okla.), said the report confirms suspicions that large U.S. corporations as a whole aren’t paying their fair share in taxes. Profitable companies, he noted, are paying taxes at a rate lower that the rate paid by teachers, firefighters and other workers.

“When some U.S. corporations use unjustifiable loopholes and offshore gimmicks to avoid paying Uncle Sam, their tax burden is shifted onto hardworking American families and small business,” Levin said.

Coburn said the report “underscores the need for comprehensive tax reform,” adding that the Treasury would benefit from lower rates for both individuals and corporations and the elimination of “loopholes” afforded big business.

“When some U.S. corporations use unjustifiable loopholes and offshore gimmicks to avoid paying Uncle Sam, their tax burden is shifted onto hardworking American families and small business,” he said. Creating giveaways and loopholes for corporations, he said, “is both anti-competitive and unfair to working families.”

Last May, the Subcommittee on Investigations conducted a hearing on Apple Inc., the giant technology firm based in Cupertino, Calif. The panel determined that Apple, using Ireland as a tax haven, has avoided paying taxes on $44 billion in income over the past four years. Timothy Cook, the company’s chief executive officer, said every technique utilized by Apple was legal and above board.

The committee found that various practices have allowed U.S.-based multinational corporations, like Apple, to amass an estimated $1.9 trillion in profits in offshore tax havens shielded from U.S. taxes. One study has estimated that offshore earnings stockpiled by Standard & Poor’s 500 companies using these strategies have increased 400 percent in the last decade.

Comments are closed.

Top Rated Comments   
Reality check, businesses past all their expense on to their customers. Taxing Corporations is actually a sneaky way for the government to tax the individual, while blaming "evil, price gouging, Big Business". There would be an uproar if the income tax hit everyone, even those at the absolute bottom of earners. So they use businesses and the payroll tax, to do it on the sly.
40 weeks ago
40 weeks ago Link To Comment
Corporations DO NOT PAY TAXES only the end user pays the tax. Taxes are a cost of doing business and as such are figured into the price of whatever widget they are selling. Close loopholes, raise corp tax, doesn't matter it all ends up coming out of the pocket of the labor/wage earner/end user.

Intentional ignorance is going to result in a lot of bloodshed.

40 weeks ago
40 weeks ago Link To Comment
Our tax system may be flawed, perhaps even fatally. And I don't have much trust in anything McCain says, even when he's pretending to care about middle class taxpayers. However, we need to keep in mind that there's no such thing as a business tax. Taxes go to their bottom line as an expense. A business must remain profitable to stay open. So if expenses increase, so does the price of the goods and services they sell. In the end, the consumer pays the tax. Once again, we don't have a tax problem; we have a spending problem. Figures Mr. Big Government McCain ignored this issue, again.
40 weeks ago
40 weeks ago Link To Comment
All Comments   (33)
All Comments   (33)
Sort: Newest Oldest Top Rated
More political BS from both sides of the aisle!

Corporations don't pay taxes. They collect taxes from consumers and forward them to the government.
40 weeks ago
40 weeks ago Link To Comment
This from the same tools that claim a reduction in the rate of government spending growth is some sort of economic armagheddon? From the same assholes that cannot cut even one thin dime of spending? That cannot ever find a program of any significance to be cut or eliminated?

Why on earth would anybody want to send yet more cash to the giant money suckhole in DC? It will only be used to purchase votes from the welfare crowd.

How about DC quit spending like Ted Kennedy on a bender? How about they actually balance a budget, instead of whining and tapdancing about not enough money being siphoned off by DC??

We have a pack of con artists and shysters for government: of course they "need more money". Com men always do.
40 weeks ago
40 weeks ago Link To Comment
Calling Obama a tax reformer is like comparing a snake oil salesman to a perfume peddler. Be that as it may, everything which comes out of Congress, re so called reform, is a whole lot of hooey and phooey, particularly since Obama Inc has Congress at the throat.
America is dealing with a regime which has zero interest in fairness, even though corps surely have the ability to circumvent loopholes, and then some. Be that as it may, without TOTAL reform via a Fair Tax, none of this matters.
As it stands, the IRS, as the collector, is about as trustworthy as con artists. Until they all clean house, none of this discussion matters - http://adinakutnicki.com/2013/05/29/irsgate-obama-inc-about-to-be-blown-wide-open-its-revolving-irs-door-commentary-by-adina-kutnicki/

Having co-owned a highly successful corp tax practice in the NY/NJ area, blowing smoke in this direction doesn't work. Spitting in the wind.

Adina Kutnicki, Israel http://adinakutnicki.com/about/
40 weeks ago
40 weeks ago Link To Comment
Carl Levin is a snake. Tom Coburn is retiring from the senate. Who are we to trust? I say: Yes. Some corporations are nasty. But others are not. My bottom line is that I have no faith in the Senate, or the House, or (most particularly) the federal bureaucracy whatsoever. I just cannot place the blame for the economic straits we are in, right here and now, on *certain* corporations. CLEARLY, it is our national government that has failed us.
40 weeks ago
40 weeks ago Link To Comment
Well, maybe that's why they were given waivers from having to implement the affordable healthcare act. They are out of money. (nudge, nudge, wink, wink)

Flat tax. No deductions, no loopholes, everyone/every entity has some skin in the game. Now that's as 'fair' as it can be.
40 weeks ago
40 weeks ago Link To Comment
Corporations are going to shift money overseas the same way they've shipped jobs overseas, and neither is a good thing when done on a large scale.
40 weeks ago
40 weeks ago Link To Comment
Reality check, businesses past all their expense on to their customers. Taxing Corporations is actually a sneaky way for the government to tax the individual, while blaming "evil, price gouging, Big Business". There would be an uproar if the income tax hit everyone, even those at the absolute bottom of earners. So they use businesses and the payroll tax, to do it on the sly.
40 weeks ago
40 weeks ago Link To Comment
...John Galt, call your office.
40 weeks ago
40 weeks ago Link To Comment
Study finds many corporations pay tax rate of effectively zero By Bernie Becker - 06/01/11

http://thehill.com/blogs/on-the-money/domestic-taxes/164103-report-corporations-pay-low-effective-tax-rates


Then lets move to a flat sales tax period, and remove everything else from the Corporate tax code we currently have and make it fixed forever! Corporations pay for the loop holes while we suffer!
40 weeks ago
40 weeks ago Link To Comment
Corporations should be paying far less than even the 12% effective rate cited in the article. If they spent less money trying to reduce their tax burden, and if that tax burden left them with more money to net, businesses would be healthier overall and their employees would therefore also be better off. Furthermore, if the Congressmen would like to prove that their stated solicitude for the tax burden of individual Americans is more than just the usual big fat lie in the service of expanding their own power over the economy, then they should be advocating for a reduction of everyone's tax rates, or even a low flat tax, not an increase in the taxes of those Americans' employers. Theirs is the same disingenuous argument made by the kind of businessmen who demand that web-based companies pay the same taxes as brick-and-mortar businesses (nearly all of which also do business on line now). The answer to an uneven playing field is not to hamstring both sides, but to free them. That, however, would require integrity, competitive ability, and lack of power-lust, virtues which are in very short supply among politicians and other incompetents.
40 weeks ago
40 weeks ago Link To Comment
Your argument Paula might have merit had it not been tried and failed. Businesses are enjoying the lowest taxes in 65 years while seeing higher profits and sitting on more liquid cash than ever in history. And they have been doing so for over a decade. Now that "healthier overall" business may have materialized but the "better off" employees have not, nor have they historically.

Flat Tax advocates also come up short in their arguments as most credible economist admit that the tax would be near 30%. And every Fair/Flat tax that's been proposed from Cain to Perry to Newt to any I've seen still leaves the top earners paying less than 2%.

Now I understand you promote "Corporations should be paying far less" and aside from your argument which fails to stand up to reality, this is unfair because of the very cost of the Corporate demands. For example, an auto supplier builds an engine component plant in Smalltown USA and hires 1200 people. With that, Smalltown needs to widen their 2 lane hwy, add a few stop lights, and maybe even hire an extra policeman or 2. And perhaps state codes require additional fire trucks and other infrastructure needs. Maybe Smalltown's water and sewer municipals have to be upgraded and additional manpower added. So my question is how is it fair that farmer Jones, mechanic Bob, and all these little folk pick up these tabs while the corporate folks don't?
40 weeks ago
40 weeks ago Link To Comment
Does it even have to be said again? Corporations simply pass on taxes to the consumer.

You pick on poor Paula who makes some really excellent comments and then regurgitate Progressive talking points that are easily rebutted by anyone with an agenda free appreciation for key economic principles.
40 weeks ago
40 weeks ago Link To Comment
1 2 3 Next View All

One Trackback to “Corporations Should Pay More, Coburn and Levin Conclude from GAO Report”