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Representation Without Taxation: Study Says Most Corporations Avoid US Income Tax

Representation Without Taxation: Study Says Most Corporations Avoid US Income Tax

JENNIFER C. KERR | August 12, 2008 06:31 AM EST | AP


WASHINGTON — Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.

Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

"It's shameful that so many corporations make big profits and pay nothing to support our country," said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich.

An outside tax expert, Chris Edwards of the libertarian Cato Institute in Washington, said increasing numbers of limited liability corporations and so-called "S" corporations pay taxes under individual tax codes.

"Half of all business income in the United States now ends up going through the individual tax code," Edwards said.

The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.

More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.

The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.

Dorgan and Levin have complained about companies abusing transfer prices _ amounts charged on transactions between companies in a group, such as a parent and subsidiary. In some cases, multinational companies can manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. The GAO did not suggest which companies might be doing this.

"It's time for the big corporations to pay their fair share," Dorgan said.

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Heretic

This goes to what I many times told DRS and others that corporations have been dodging taxes for a long time. And, to no surprise, Bill Clinton was on the same page as Jr. in helping them avoid their civic duties. Imagine a Hillary presidency where this would continue in spades. Two thirds paying shit, and may of those STILL getting a refund on what they didn't pay in the first place.

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"In space no one can hear you scream. in D.C. it won't matter..." -Clinton Resurrection: The Alien Queen lives!

Malkavian

Did they actually make any money? GM has lots of sales, but had $15 billion loss for the quarter. What are they gonna pay tax on?

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Woof!

Kanadesaga

2/3 of ALL US corporations PAID NO TAXES! Are they all losing money? If so shouldn't "free market" forces suggest they sink? Or is it more likely that creative accounting provides "NO profit". While CEOs make millions. But just keep defending the criminals.

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Malkavian

Well, actually, it seems GM is sinking... they are closing more and more plants i heard... And if CEO makes millions, they pay income tax on that, which is separate from corp tax. I just thought it was funny article mentioned total revenue for those corps and not EBIT.

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Woof!

Kanadesaga

Is GM 2/3 of all US corporations? No. So someone is cheating the government. Like Cayman Island post box offices, (Cheney's little brainstorm). and you know the CEO is paying a smaller percentage of their money than middle class. I don't care what the rates say they pay. their accountants and deferred payments and shit allows them to cheat. the laws have been written by the rich for the rich. THAT, you cannot deny.

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Heretic

See what happens when both parties conspire together to prevent campaign finance reform?

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"In space no one can hear you scream. in D.C. it won't matter..." -Clinton Resurrection: The Alien Queen lives!

Kanadesaga

It goes way beyond that. the relationship between government and big business is incestuous at best. and down right criminal inreality. Of course ask any economist and they'll defend the system. "Free market" and all that. Even though our markets haven't been free in generations. If ever.

an example and forgive my lack of details. A corporation is going to be denied a right to market a new artificial sweetner. The then head of the FDA, approves the product, even though tests show cancer and death from its use. Then he resigns from the FDA and goes to work for the company that makes it. Aspertine or something like that. I am remembering this off the top of my head. I can research if you like.

Corporatists see nothing wrong with this and even encourage it! "It's business." As if saying that, or their other standard, "it's for the stockholders" somehow justifies any and all criminality for profit! for that is what it is all about. and only profit.

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johnofNY

You can go to your favorite chemical distributor, that specializes in food ingredients, website and find it, if they offer searches for products.

Kanadesaga

go away dog.

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