We spend a lot of time, both in industry and across general political discourse, bemoaning the U.S. corporate tax rate which, at 35 percent, is one of the highest globally.
And when we’re done talking about that, we start talking about all those American companies who utilize loopholes and other legal accounting techniques, to pay as little as they possibly can. But did you ever wonder who was winning this little game, and who was losing?
Well, the New York Times just published a story about a new study that is exploring the actual tax rates of profitable companies, and here’s what they found – over the period between 2008 and 2015, 258 of the Fortune 500 companies were consistently profitable, and paid an average effective tax rate of about 21 percent.
But what the study also uncovered was that there were 18 companies over that 8-year period that paid no federal income taxes at all – zero – and 24 companies that paid zero taxes in 4 out of the 8 years.
It’s hard to blame a business for taking advantage of any available tools or incentives that help it improve its bottom line, especially if they’re not actually breaking the law, and it’s clear that many businesses were happy to take money in the form of tax breaks: In fact, the 258 corporations collectively were on the receiving end of $513 billion in tax breaks and more than half, $277 billion, went to just 25 of the most profitable corporations.
Now, who is it that’s coming out on top? It appears that most of the 18 companies that paid no federal income taxes over the studied period were in the energy sector, and include big names like GE, Excel and Duke Energy, and PG&E. The New York Times attributes this to successful lobbying that resulted in lopsided tax breaks based on industry. These breaks range from accelerated depreciation write-offs for industrial equipment to actual oil drilling subsidies.
And the ones who aren’t faring so well? According to the article, there are only two sectors where companies are paying more than 30 percent of their profits in federal income tax – and that’s health care and retail.
This is IEN Now with Anna Wells.
