According to a GAO study released yesterday, most corporations pay no federal tax. This is quite an amazing statement - we are told relentlessly that we need to reduce taxes for corporations (they are stated at 35%) so they can create more jobs (overseas ahem). While I think it might be a truth for small businesses, it seems the bigger fish have gamed the system to perfection. Something to think about the next time we are told "we need to cut taxes for corporations to remain competitive." Remember, folks, the % of GDP that is enjoyed by corporations versus workers has reached levels not seen since the 1920s (i.e. the workers in the country are seeing the lowest percentage of profits since right before the Great Depression) That's what happens when the politicians are bought and paid for... (Emphasis mine, and my comments in italics.)
- Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.
- The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005. (Granted some could have lost money that year.)
- More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said. During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Senators.
- The GAO said corporations escaped paying federal income taxes for a variety of reasons including operating losses, tax credits and an ability to use transactions within the company to shift income to low tax countries.
- More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies, or 66.7 percent of them, paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales
- The study showed about 28 percent of large foreign corporations, those with more than $250 million in assets, doing business in the United States paid no federal income taxes in 2005 despite $372 billion in gross receipts, the senators said. About 25 percent of the largest U.S. companies paid no federal income taxes in 2005 despite $1.1 trillion in gross sales that year, they said.
So 2 in 3 US corporations paid no taxes in 2005... yet I don't quite believe 2 in 3 lost money ;) 35% of $0 = $0.
More tax cuts for corporations, please, so profits can "trickle down" to the rest of us :) Can't even imagine how tough it would be for workers if these corporations actually had to pay taxes... maybe median wages could drop by 1/3rd.
Other than the fact it would wipe out large portions of our "service industry" (accountants) I think a nice one-page document for taxes should suffice for both individuals and corporations. A nice simple flat tax with rebate for those under certain income thresholds so they can survive would be far too simple a solution, eh?