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Tue Aug 12, 2008 at 03:30:37 AM PDT
The AP has a story about a report the Government Accountability Office is expected to release today. It will say that two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005. During the same time, 68 percent of foreign companies doing business in the U.S. avoided corporate taxes.
The GAO report is based samples of corporate returns obtained from the Internal Revenue Service for the years 1998 through 2005. According to the report, more than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax. The companies had combined revenues of $2.5 trillion. About 25 percent of the U.S. corporations not paying corporate taxes had at least $250 million in assets or $50 million in receipts.
FWIW's diary :: ::
Senators Byron Dorgan (D-ND) and Carl Levin (D-MI) asked the GAO to complete the study, apparently after finding that companies have been abusing transfer prices. Transfer prices are transaction charges between parent and subsidiary companies, shifting income from higher to lower tax jurisdictions.
Senator Dorgan said, "It's shameful that so many corporations make big profits and pay nothing to support our country. It's time for the big corporations to pay their fair share."
This is not the first such report. A 2004 GAO study found 61% of American corporations in the "tax free" zone, including 39% of large companies. In 2007, corporations' share of the total U.S. tax burden was 14.4%, compared to 50% in 1940. Taxes paid by individuals is expected to increase from $1.16 trillion in 2007 to $1.21 trillion this year, while corporate taxes are expected to further decline, from $370 billion to $364 billion.
The 2004 GAO study found that 24 of the largest federal contractors used Cayman Islands "offices" to reduce their tax burden. KBR, the largest Iraq war contractor, admitted to using two Cayman Islands divisions, avoiding hundreds of millions of dollars in Medicare and Social Security taxes. Some experts estimate the U.S. Treasury could be losing as much as $100 billion as a result of companies using shell corporations.
Meanwhile, we keep hearing that U.S. corporate tax rates are the second highest in the developed world, making us less competitive. Citizens for Tax Justice, a nonprofit group, found that the corporate tax burden in the U.S. is the world’s third lowest when measured as a percentage of gross domestic product.
Last year Halliburton moved its corporate headquarters from Houston to Dubai in the United Arab Emirates. They can't afford to pay more taxes, even though they had profits of $2.3 billion in 2006. Halliburton contracts in Iraq were estimated to be $25.7 billion as of March 2007.
The AP has a story about a report the Government Accountability Office is expected to release today. It will say that two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005. During the same time, 68 percent of foreign companies doing business in the U.S. avoided corporate taxes.
The GAO report is based samples of corporate returns obtained from the Internal Revenue Service for the years 1998 through 2005. According to the report, more than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax. The companies had combined revenues of $2.5 trillion. About 25 percent of the U.S. corporations not paying corporate taxes had at least $250 million in assets or $50 million in receipts.
FWIW's diary :: ::
Senators Byron Dorgan (D-ND) and Carl Levin (D-MI) asked the GAO to complete the study, apparently after finding that companies have been abusing transfer prices. Transfer prices are transaction charges between parent and subsidiary companies, shifting income from higher to lower tax jurisdictions.
Senator Dorgan said, "It's shameful that so many corporations make big profits and pay nothing to support our country. It's time for the big corporations to pay their fair share."
This is not the first such report. A 2004 GAO study found 61% of American corporations in the "tax free" zone, including 39% of large companies. In 2007, corporations' share of the total U.S. tax burden was 14.4%, compared to 50% in 1940. Taxes paid by individuals is expected to increase from $1.16 trillion in 2007 to $1.21 trillion this year, while corporate taxes are expected to further decline, from $370 billion to $364 billion.
The 2004 GAO study found that 24 of the largest federal contractors used Cayman Islands "offices" to reduce their tax burden. KBR, the largest Iraq war contractor, admitted to using two Cayman Islands divisions, avoiding hundreds of millions of dollars in Medicare and Social Security taxes. Some experts estimate the U.S. Treasury could be losing as much as $100 billion as a result of companies using shell corporations.
Meanwhile, we keep hearing that U.S. corporate tax rates are the second highest in the developed world, making us less competitive. Citizens for Tax Justice, a nonprofit group, found that the corporate tax burden in the U.S. is the world’s third lowest when measured as a percentage of gross domestic product.
Last year Halliburton moved its corporate headquarters from Houston to Dubai in the United Arab Emirates. They can't afford to pay more taxes, even though they had profits of $2.3 billion in 2006. Halliburton contracts in Iraq were estimated to be $25.7 billion as of March 2007.