REPORT: Corporations Pay Lower Tax Rates Than The Middle Class

By Alan Pyke/Think Progress

Large, profitable U.S. corporations actually paid just a 12.6 percent effective tax rate in 2010. That’s barely a third of the 35 percent corporate rate on the books, and it’s actually lower than the median effective tax rate for middle-class Americans. The number comes from a Government Accountability Office (GAO) study intended to clarify the terms of debate as lawmakers weigh changes to the business tax code.

Most analyses of the gap between the tax rate on the books and the “effective rate” companies actually pay rely upon company financial statements, but the GAO’s work is based on actual corporate tax returns for 2010. The researchers found that large companies – those “with assets of $10 million or more” – that are profitable paid about 12.6 percent of their global income in U.S. taxes. The figure rises to 16.9 percent of global income if all foreign, state, and local taxes are factored in. Companies that took a loss for the year actually paid a higher rate than the profitable ones.

In the spring, Apple CEO Tim Cook defended his company’s entirely legal tax avoidance strategies before a Senate committee. Apple used Ireland-based subsidiaries to pay almost zero tax on tens of billions in income from international sales, and other massive firms like Google and Microsoft use similar corporate structures and accounting strategies to avoid billions in taxes.

The new numbers are inconvenient for the ongoing business community’s push to slash corporate tax rates. A group called the Alliance for Competitive Taxation (ACT) was launched in June by 40 major corporate brands and cites multiple studies using different methodologies to claim that U.S. companies pay among the highest effective tax rates in the world, but this new data would appear to refute those studies. Recent work from the Economic Policy Institute has also shown no correlation between corporate tax rates and economic growth.

CEOs Of Tax Dodging Corporations Push Congress To Cut Corporate Tax Rates

By Pat Garofalo/Think Progress

Several corporate CEOs representing the Business Roundtable, a lobbying group, were on Capitol Hill today to unveil a set of measures that they claim will boost the economy. Not surprisingly, some of the high-profile items are a cut in the corporate tax rate and shifting to what’s known as a territorial tax system:

Fresh out of a meeting with members of the Blue Dog Coalition, dozens of CEOs in town for a series of Business Roundtable policy and lobbying meetings today unveiled proposals to boost the economy.

The plan, billed as “Taking Action for America,” calls for a balanced federal budget, a reform of federal regulations and a lower corporate tax rate based on a territorial tax system, among others.

A territorial system, as well as cutting the corporate tax rate without raising more corporate tax revenue, are both misguided proposals. But the interesting thing about these particular CEOs pushing this particular policy prescription is that several of them already run corporations that pay little to nothing in taxes.

For instance, Boeing CEO Jim McNerny is part of the group calling for corporate tax cuts, despite the fact that his company has a negative federal tax rate for the last decade. Only twice in the last ten years has Boeing had federal tax liability in a given year, and between 2008 and 2010, the company made $9 billion in profits without paying any federal corporate income tax.

Andrew Liveris, president and CEO of the Dow Chemical, also joined the lobbying party, even though his company received nearly half a billion dollars in tax refunds in 2010. Proctor & Gamble’s CEO also participated, while heading a company very fond of exploiting loopholes to avoid taxes.

Corporate tax rates are already at a 40 year low. As billionaire investor Warren Buffett explained, “it is a myth that American corporations are paying 35 percent or anything like it…Corporate taxes are not strangling American competitiveness.” Yet corporate CEOs whose companies already pay literally nothing think driving rates down further is the answer to boosting the economy.

Between 2008 And 2010, 30 Big Corporations Spent More Lobbying Washington Than They Paid In Income Taxes

By Zaid Jilani/Think Progress

Today, thousands of 99 Percenters will march on K Street in Washington, D.C. as a part of an action called “Take Back The Capitol,” taking aim at the lobbying firms that corporate interests use to influence the federal government.

A report released this month by Public Campaign demonstrates just how important it is for Americans to battle corporate special interests and reclaim our democracy. The group’s research finds that thirty big corporations actually spent more money lobbying the federal government between 2008 and 2010 than they spent in taxes. For example, General Electric — one of the top 10 most profitable companies in the world — got a net tax rebate of $4.7 billion during this period. Meanwhile, it spent $84 million lobbying the federal government.

Here’s the full list of the 30 corporations identified and what they paid in federal taxes as opposed to lobbying:

To follow today’s actions, check out Take Back The Capitol’s website, and find instant updates about the protest through the hashtag #99indc. ThinkProgress will be covering today’s events at our 99 Percent Movement special topics page.

Gov. Rick Scott Aide Admits That Scott’s Corporate Tax Cut Won’t Create Jobs

By Tanya Somanader/Think Progress

Florida Gov. Rick Scott (R) started out as the jobs candidate, promising to create 700,000 jobs “on top of” the jobs added from Florida’s normal growth. He then revised that plan down to just “700,000″ before recently declaring, “I don’t have to create any jobs.”

Scott’s need to divorce himself from his own job-creation promises is not surprising, since many of his policies have actually killed job growth. While admitting that his preference is to cut “people,” Scott has directed his focus toward corporate tax cuts rather than job creation. In fact, his legislative affairs director Jon Costello publicly admitted as much. Asked about the value of Scott’s most recent corporate tax break, Costello admitted “quite frankly” that the tax breaks might not be enough for a company to hire even one person:

Rep. Evan Jenne, D-Dania Beach, asked Costello of the governor’s plan would require that companies create jobs in exchange for the new tax breaks.

“The last thing we would want to do is just have a CEO pocket the money and just say ‘Thanks for the cash,’” Jenne said during a meeting of the House Economic Affairs Committee .

“Quite frankly, depending on the size and scope of the company, their savings and tax breaks might not be enough to bring a new person on,” Costello answered. “But it might be enough to buy a new piece of equipment or do something that injects money back into the economy.”

In a state with 10.7 unemployment rate, Scott chose to kill a high-speed rail project that would’ve created 71,000 jobs, boasted about laying off 15,000 government employees, and plans to reject funds from Obama’s new jobs plan that would create more than 60,000 jobs.

Instead, he champions corporate tax breaks that even his own administration says likely won’t work. We’ve noted before how it is exceedingly unlikely that Scott’s corporate tax cut — particularly his original plan to eliminate the corporate tax entirely — would create any jobs.

Asked point blank whether Scott is “backtracking” from his promise to create at least 700,000 jobs, Costello admitted, “it’s a very difficult question.” Given his policy choices, the answer actually seems pretty obvious.

Republican Congressman Dan Benishek: Oil Companies Already Pay Their Fair Share of Taxes

From Michigan Democratic Party

LANSING – Republican Congressman Dan Benishek (MI-1) told a public forum in Petoskey “I think oil companies pay their fair share (of taxes).” (Petoskey News Review, August 24, 2011)

“How out of touch is Benishek?” asked Michigan Democratic Party Chair Mark Brewer. “Doesn’t he know or care that in 2009 Exxon Mobil paid no taxes to the U.S. government? Doesn’t he know that despite record profits in the tens of billions of dollars oil companies are still receiving $4 billion a year in taxpayer subsidies?”

“I am sure Benishek knows he has received nearly $50,000 in campaign contributions from the oil and gas industry (opensecrets.org),” continued Brewer. “Perhaps that is why he defends their low or nonexistent taxes and excessive taxpayer subsidies in the face of their record profits.”

“The people of the 1^st District deserve better than Benishek who is nothing more than a shill for Big Oil, one of his biggest contributors,” said Brewer. “They deserve a Member of Congress who will stand up to Big Oil, not defend them.”

If Banks Paid Their Full Taxes, We Could Rehire All 132,000 Teachers Laid Off During The Recession — Twice

By Zaid Jilani

Today, hundreds of people from Make Wall Street Pay, one member of a larger Main Street Movement that seeks to defend the American middle class, shut down a Bank of America branch in Washington, D.C. over the bank’s tax dodging. In 2009, the bank used loopholes in the tax code to avoid paying a penny of taxes. The protesters, many of them homeowners who had been abused by the bank’s mortgage policies, were outraged that the nation’s biggest bank was paying less taxes than they were in 2009.

Last week, National People’s Action and the Public Accountability Initiative, both of whom are organizing the Make Wall Street Pay protests, put out a report, “Big Bank Tax Drain.” The report lays out the costs that average Americans — who are being asked to sacrifice their education, their health, and their pensions — incur from the egregious tax dodging by the big banks.

In one particularly shocking statistic, the report notes that the six biggest banks in the United States together paid “income tax at an approximate rate of 11″ percent in 2009 and 2010. If they had paid 35 percent, which is the legally mandated rate without loopholes, the federal government would have received “$13 billion in tax revenue” — a sum which would cover the salaries, for two years, of every single one of the 132,000 teachers laid off since the beginning of the economic recession:

Six banks – Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley together paid income tax at an approximate rate of 11% of their pre-tax US earnings in 2009 and 2010. Had they paid at 35%, what they are legally mandated to pay, the federal government would have received an additional $13 billion in tax revenue. This would cover more than two years of salaries for the 132,000 teacher jobs lost since the economic crisis began in 2008.

As the Wonk Room’s Pat Garofalo writes, “Though the U.S. has a high statutory corporate tax rate, the effective tax rate that corporations actually pay is far lower, due to the myriad loopholes and credits in the corporate tax code, as well as thewidespread sheltering of income in tax havens. As the Center on Budget and Policy Priorities found, ‘corporate tax revenues are now at historical lows as a share of the economy.’”

In addition to shutting down a local Bank of America branch, Make Wall Street Pay protesters also demonstrated outside the convention of the National Association of Attorneys General, demanding action on the foreclosure crisis. They also flooded the offices of Minority Leader Mitch McConnell (R-KY) and House Speaker John Boehner (R-OH), demanding that both support policies that would make big Wall Street banks like Goldman Sachs and Citigroup pay their fair share before attacking investments and crucial services in Main Street America.

UPDATEInside the Bank of America, protesters handed the bank-teller a bill for the amount of taxes the megabank failed to pay in recent years:

UPDATEScores of protesters flooded Boehner's office, telling him they "found the money" we need to tackle our debt without laying off teachers and gutting crucial services:

UPDATEThe protesters also encamped outside McConnell's office:

UPDATEProtesters captured video of the demonstration at Bank of America. Watch it:

Ending Special Interest Tax Dodging Would Balance Wisconsin’s Budget And End The War On Unions

By Zaid Jilani

Over the weekend, Main Street America held the largest rallies yet to take place against Wisconsin Gov. Scott Walker’s (R) radical proposal to gut his state’s public employee union collective bargaining rights. Walker claims that his assault on the state’s labor unions is designed to help close his state’s budget deficit and save taxpayers money.

Yet the truth is that the relatively minor budget woes that Wisconsin faces aren’t aresult of the middle class pay and benefits afforded to hard-working teachers, municipal employees, and other Main Street Americans. Rather, declining tax revenues from a recession caused by Wall Street and corporate tax cuts Walker immediately rammed through the legislature are much more responsible for the relatively minor shortfalls the state is facing.

Walker claims that that the state is facing a $137 million budget deficit and says that the state’s hard-working public employees should sacrifice their pay and benefits and have their collective bargaining rights crippled in order to close this budget gap. Additionally, Walker has included language in his latest budget proposal that wouldrestructure the state’s debt, which would essentially take care of any economic problems in the short-term. Despite the fact that they aren’t responsible for a budget deficit, Wisconsin’s public employee unions have “announced they would accept paying half the cost of pensions and 12.6 percent of the cost of health insurance — as long as they were allowed to keep their collective bargaining rights” — a deal Walker has flatly rejected.

Yet if Walker really feels like the state is facing unacceptable budget problems and that it needs to be able to recoup revenue, he doesn’t have to attack the pay, benefits, or rights of his public employees at all. All he has to do is look at his state’s tax code and take action to close a handful of special interest tax loopholes and tax breaks so that the state’s richest pay their fair share so that the middle class that has already sacrificed so much doesn’t continue to have to bear all the burdens of the recession by itself. ThinkProgress has assembled a far from comprehensive list of just some of these special interest tax breaks and loopholes that could help balance the budget and end any need for a war on unions:

– Close The Internet Sales Tax Loophole: Currently, online retailers all over the country make skillfull use of the tax code to avoid paying sales taxes. Big retailers like Amazon.com set up subsidiary corporations in states and then argue that the subsidiary corporation doesn’t obligate the parent company to collect sales taxes in the state. A University of Tennessee study estimates that “in 2011 alone, Wisconsin will lose an estimated $127 million in uncollected sales tax on purchases made online” — only $10 million short of what Walker projects his state’s deficit to be. While the best way to close the internet sales tax loophole is for federal action, some states like New York have enacted what they refer to as the “Amazon law,” which would decree that any internet sales company would be liable for the state’s tax laws if it has “independent ‘affiliate’ websites in the state promoting sales on its behalf.” After New York enacted its law to capture previously lost revenues in 2008, Amazon responded by unsuccessfully suing the state. Wisconsin could follow New York’s lead.

- Close Special Interest Property Tax Loopholes: Much of the funding necessary to support government services in Wisconsin comes from property taxes, collected by municipalities, with these taxes currently generating “far more revenue than any other state or local tax.” Considering that much of the Wisconsin state budget is consumed by aid to municipalities, closing these loopholes would relieve city budgets and therefore help reduce statewide expenditures. The current exemptions on potential property taxes amount to $700 million a year. Many of these exemptions were won by interest groups with clout in the state legislature. For example, nonprofit community hospitals — which make up 89% of hospital revenue in the state — currently have an exemption, allowing them to forgo $128 million in taxes in 2008. Certain retirement homes also have an exemption that costs the state $15 million a year. The 2009-2011 state budget included a special exemption “for student housing owned by a nonprofit organization that houses up to 300 students, with at least 90% of its residents enrolled at the University of Wisconsin-Madison” — which benefitted a single dorm: the “Pres House on the UW-Madison campus, which would pay about $250,000 in taxeswithout it.” While some of the state’s current exemptions make sense, others simply benefit special interest groups and should be closely examined.

- Crack Down On Corporate Income Tax Dodgers: The Institute for Wisconsin’s Future (IWF) notes that the state is “losing over one billion dollars annually to the ‘tax gap,’ the difference between what is legally owed by taxpayers and what is actually paid.” It notes that “business income is only 8% of Wisconsin income, but responsible for 57% of the underreporting tax gap,” mostly due to underreporting. This gap accounts for $113 million in revenue. Some companies dodge their taxes by setting up subsidiaries in neighboring states with corporate income tax havens, like Nevada and Delaware. IWF suggests that simplying the tax code and expanding the network of state auditors could help close the tax gap and stop businesses from underreporting their income to avoid taxes.

And it’s worth noting that the tax cuts Walker rammed through during his first month in office “will reduce general fund tax collections by $55.2 million in 2011-12 and $62.0 million in 2012-13.” It is simply irresponsible for Walker and his allies to continue to blame middle class Wisconsinites for his state’s modest budget woes while ignoring the tax dodging by the state’s special interests who continue to fail to pay their fair share.

UPDATERather than making sure special interests and tax dodgers pay their fair share, Walker and his allies are busy bolting the capitol building's windows shut so protesters can't get in and so do the demonstrators inside can't get out without being locked out (HT: @ericming):There are some reports that the bolting story may be false.

UPDATENearly a hundred Idaho students protesting the state's upcoming education policies that would layoff hundreds of teachers have encamped themselves on the second floor of the capitol rotunda and are "quietly doing their homework." Watch it:

At Tea Party Event, Gov. Scott Unveils Budget That Raids Low-Income Health Services To Cut Corporate Taxes

By Pat Garofalo

Today, at a Tea Party event in tiny Eustis, Florida, Gov. Rick Scott (R-FL) unveiled his new state budget. Since his time on the campaign trail, Scott has been promising to pair steep budget cuts with reductions in both the corporate and property tax rates. “It’s not daunting. It’s going to be fun. It’s going to be exciting,” Scott said when asked about tackling his state’s budget woes. He has said that he plans to make Florida the “most fiscally conservative” state in the nation. True to his word, Scott’s budget slashes corporate taxes, while raiding Medicaid services for low-income residents in order to come up with savings: Gov. Rick Scott on Monday afternoon will unveil a proposed state budget that includes deep spending cuts of an estimated $5 billion and will ask lawmakers to approved a dramatic reduction in property taxes…He also wants to trim about $700 million in corporate income taxes in Florida, which already has one of the nation’s lowest rates. [...] Another big target for savings: the growing health insurance program for the poor and financially challenged, Medicaid. More than half of Medicaid’s $20.3 billion tab is picked up by the federal government, which can halt some wholesale changes. Scott and the Legislature can cut up to half of the program’s so-called optional services, many of which are popular and are designed to save money, however. Regardless, the state would lose hundreds of millions in federal matching money. Scott already presides over a state with one of the most regressive tax systems in the country. The average tax rate on a low-income individual in Florida is 13.5 percent, while the average tax rate on the someone in the richest one percent of Floridians is a paltry 2.6 percent. Instead of finding new sources of revenue, Scott decided to cut into services designed to help those who are already bearing the burden of financing the state, while lavishing tax breaks on corporations. Republican lawmakers in Florida have already cast doubt on whether or not Scott’s spending cuts will actually come to pass, and Republican school officials worry that his plan to reduce property taxes will be “devastating” to the state’s schools. Ultimately, as the Orlando Sentinel reported, the GOP leadership in the legislature has said that it’s “unlikely to approve tax cuts this year.” This is likely a wise course of action, considering what happened the last time the Tea Party got its hands on a local budget. Cross-posted on The Wonk Room. UPDATE According to the text of the speech Scott delivered at the unveiling, he plans to cut $4 billion out of Medicaid while reducing the corporate income tax from 5 percent to 3.3 percent. Scott envisions completely phasing out the corporate income tax by 2018. UPDATE Scott's cuts may also result in the closing of one-third of Florida's state parks.

M.C.L Comment: People in Florida are now discovering suffering from "Hatin that nigger president"syndrome has a price and that price is they're going to carry Rush and the other Floridian millionaires burden while services important to them will be cut.