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American Corporations Tell IRS the Majority of Their Offshore Profits Are in 12 Tax Havens

June 5, 2014 Comments off

American Corporations Tell IRS the Majority of Their Offshore Profits Are in 12 Tax Havens
Source: Citizens for Tax Justice

A few days after Americans filed their tax returns last month, the Internal Revenue Service released data on the offshore subsidiaries of U.S. corporations. The data demonstrate, in an indirect way, that these companies are not playing by the same rules as the rest of us.

The figures show how much profit American corporations tell the IRS that their subsidiaries have earned in each foreign country. Amazingly, American corporations reported to the IRS that the profits their subsidiaries earned in 2010 in Bermuda, the Cayman Islands, the British Virgin Islands, the Bahamas and Luxembourg were greater than the entire gross domestic product (GDP) of those nations in that year.

It is obviously impossible for American corporations to actually earn profits in a given country that exceed that country’s total output of goods and services. Clearly, American corporations are using various tax gimmicks to shift profits actually earned in the U.S. and other countries where they actually do business into their subsidiaries in these tiny countries. This is not surprising, given that these countries impose little or no tax on corporate profits.

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Who Pays Taxes in America in 2014?

April 16, 2014 Comments off

Who Pays Taxes in America in 2014?
Source: Citizens for Tax Justice

All Americans pay taxes. Everyone who works pays federal payroll taxes. Everyone who buys gasoline pays federal and state gas taxes. Everyone who owns or rents a home directly or indirectly pays property taxes. Anyone who shops pays sales taxes in most states.

The nation’s tax system is barely progressive. Those who argue that the wealthy are overtaxed focus solely on the federal personal income tax, while ignoring the other taxes that Americans pay. But, as the table to the right illustrates, the total share of taxes (federal, state, and local) that will be paid by Americans across the economic spectrum in 2014 is roughly equal to their total share of income.

Many taxes are regressive, meaning they take a larger share of income from poor and middle-income families than they do from the rich. To offset the regressive impact of payroll taxes, sales taxes and even some state and local income taxes, we need federal income tax policies that are more progressive.

Reform the Research Tax Credit — Or Let It Die

December 9, 2013 Comments off

Reform the Research Tax Credit — Or Let It Die
Source: Citizens for Tax Justice

Business lobbyists are pushing Congress to enact tax “extenders” — a bill to extend several temporary tax breaks for business that expire at the end of this year. A new report from Citizens for Tax Justice examines the largest of those provisions, the federal research and experimentation tax credit, a tax subsidy that is supposed to encourage businesses to perform research that benefits society. The report explains that the research credit is riddled with problems and should be either reformed dramatically or allowed to expire.

Tax Reform Details: An Example of Comprehensive Reform

November 1, 2013 Comments off

Tax Reform Details: An Example of Comprehensive Reform
Source: Citizens for Tax Justice

Citizens for Tax Justice presents a detailed tax reform plan that accomplishes the goals we set out in an earlier report: raise revenue, enhance fairness, and end tax incentives for corporations to shift jobs and profits offshore.

CTJ’s tax reform proposal would accomplish this by ending some of the biggest breaks for wealthy individuals and corporations, including the special low tax rates for the investment income that mostly goes to the richest Americans and the rule allowing American corporations to “defer” (sometimes forever) paying U.S. taxes on their offshore profits.

The result would be $2 trillion in increased revenue over a decade, plus some additional revenue that would be raised in the first decade due to shifts in the timing of tax payments. The top personal income tax rate would be 36 percent — but this would apply to all income, including capital gains and stock dividends that are now taxed at much lower rates. Corporations would no longer have any incentive to tell the IRS that their U.S. profits are actually earned in a tax haven like Bermuda or the Cayman Islands because they would be taxed at the same rate no matter where they are earned.

Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010

November 3, 2011 Comments off

Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010
Source: Citizens for Tax Justice
From press release (PDF):

A comprehensive new study that profiles 280 of America’s most profitable companies finds that 78 of them paid no federal income tax in at least one of the last three years. Thirty companies enjoyed a negative income tax rate over the three year period, despite combined pre-tax profits of $160 billion. These are among the findings in “Corporate Taxpayers and Corporate Tax Dodgers, 2008-2010,” released today by Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

“These 280 corporations received a total of nearly $223 billion in tax subsidies,” said Robert McIntyre, Director at Citizens for Tax Justice and the report’s lead author. “This is wasted money that could have gone to protect Medicare, create jobs and cut the deficit.”

The study examines 280 corporations, all from the Fortune 500 list. All of the companies were profitable in each of the last three years and provided sufficient and reliable information in their financial reports about their pretax U.S. profits and their U.S. federal income taxes.

Corporations are lobbying for lower corporate rates and an exemption for profits they shift offshore. McIntyre, however, says “Our study provides proof that too many corporations are already being coddled by our tax system.” Findings in the report include:

  • The average effective tax rate for all 280 companies in the study over the three year period was 18.5 percent; for the period 2009-2010 it was 17.3 percent, less than half the statutory rate of 35 percent.
  • 78 of the companies enjoyed at least one year in which their federal income tax was zero or less.
  • 30 companies enjoyed a negative income tax rate over the entire three year period on their combined pre-tax profits of $160 billion.
  • Total tax subsidies given to all 280 profitable corporations amounted to $222.7 billion from 2008-2010.
  • Wells Fargo tops the list of 280 U.S. corporations receiving the most in tax subsidies, getting nearly $18 billion in tax breaks from the U.S. treasury in the last three years.
  • Pepco Holdings had the lowest effective tax rate of all the companies in the study, at negative 57.6 percent over the three year period.
  • Some companies within sectors fare worse than others. For example, the report finds that FedEx paid a 0.9 percent tax rate over the three year period while its competitor, UPS, paid a 24.1 percent rate.
  • While retailers and wholesalers in the study generally pay average effective tax rates of about 30 percent, Amazon.com paid a rate of only 7.9 percent on its $1.8 billion in profits from 2008-2010.
  • Financial services received the largest share (16.8 percent) of all federal tax subsidies over the last three years. More than half of federal corporate tax subsidies for companies in the study went to four industries: financial services, utilities, telecommunications, and oil, gas & pipelines.
  • The top ten defense contractors saw their combined tax rate decline from 19.3 percent in 2008 to a mere 10.6 percent rate in 2010.
  • U.S. corporations with significant (ten percent or more of their total worldwide profits) foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits.

Twelve Corporations Pay Effective Tax Rate of Negative 1.5% on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies

June 3, 2011 Comments off

Twelve Corporations Pay Effective Tax Rate of Negative 1.5% on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies
Source: Citizens for Tax Justice

CTJ analyzes the pretax U.S. profits, federal taxes paid and effective tax rates of a dozen Fortune 500 companies over the 2008-10 period. From 2008 through 2010, these 12 companies reported $171 billion in pretax U.S. profits. But as a group, their federal income taxes were negative: –$2.5 billion.

+ Full Report (PDF)

Hat tip: Charles M. Blow

Undocumented Immigrants Pay Taxes

April 27, 2011 Comments off

Undocumented Immigrants Pay Taxes
Source: Citizens for Tax Justice

Weeks after the New York Times broke the story of General Electric’s tax avoidance, it’s still hard for many Americans to believe how successfully GE has managed to avoid owing any tax on its profits. Yet some anti-immigrant groups find it much more plausible that undocumented immigrants somehow pay no taxes at all, while relying heavily on state and local government services.

A new report from the Immigration Policy Center, fueled by data from ITEP’s Microsimulation Model, shows that in fact, undocumented families pay a substantial amount of state and local taxes across the nation. The report estimates that these families pay over $11 billion a year in state and local sales, excise, income and property taxes.

It’s notoriously difficult to know precisely even the basic facts about the changing undocumented population in the US, and the IPC report should be understood not as a definitive answer but as a sensible estimate based on the best available data. But the new IPC report serves as an important reminder that undocumented taxpayers make important financial contributions to the fiscal health of state and local governments.

+ Full Report

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