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New data released today by Citizens for Tax Justice reveals that 78 Fortune 500 companies did not pay any federal income taxes in at least one of the past three years, despite posting $160 billion in U.S. profits. The report found that thirty companies paid a negative average tax rate over the past three years, meaning they took in more income from tax credits and write offs than they paid in taxes.
Many of these companies avoid paying taxes on U.S. profits by shifting those profits to subsidiaries located in offshore tax havens. An earlier MASSPIRG report found that tax havens, which cost the U.S.an estimated $100 billion every year, result in each individual tax filer here in Massachusetts either paying an extra $608 to make up for the lost revenue or shouldering that much more of the federal debt.
"Small businesses and ordinary taxpayers can’t afford the clever tax lawyers that make income earned in America magically show up on the books in the Caymans," said Deirdre Cummings, legislative director for MASSPIRG. "When giant corporations escape paying their taxes, the rest of us get stuck with the bill."
This report comes on the heels of a new proposal from the tax-writing House Ways and Means Committee Chairman Dave Camp (MI) to create a territorial tax system. Under current law, corporations must pay taxes on off-shored profits when they bring the money back to the country. However, the reform proposal would exempt such profits from virtually all corporate taxation.
"Existing loopholes already allow profits legitimately earned in Massachusetts or any other state to sit tax-free in places like Bermuda," said Cummings. "With the door allowing gimmicky corporate tax avoidance already ajar, Camp’s proposal kicks it wide open," said Cummings.
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Click here for a copy of Citizens for Tax Justice’s report.
MASSPIRG is a non-profit, non-partisan, public interest organization in Massachusetts.
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