50 companies on the S&P 500 paid a zero percent corporate tax rate over the past year

Posted by AzBlueMeanie:

More than 50 companies on the S&P 500 paid a zero percent corporate tax rate over the past year. Think Progress reports, Over 10 Percent Of America’s Largest Companies Pay Zero Percent Tax Rates:

Among companies listed on the S&P 500, almost one in nine paid an effective tax rate of zero percent — or even lower — over the past year, according to an analysis by USA Today.

There are 57 separate companies listed on the index that paid a zero
percent rate from the past year. Those companies include both household
names like Verizon and News Corp. and lesser-known corporate giants like
the data storage manufacturer Seagate (market value $15.9 billion) and
Public Storage (market value $29.5 billion). Many of the companies USA
Today identified in its analysis as paying negative rates make the list
because they lost money, but several were profitable. Previous analyses
have shown that the typical corporation pays a lower effective tax rate than most middle-class families, and a far lower one than the statutory corporate tax rate against which business interests disingenuously rail.

Getting to a zero percent tax rate despite turning a profit requires
creative accounting, but not lawbreaking. The corporate tax code allows
companies to avoid tax liability even in years when they turn a profit.
Some of the profitable companies on the newspaper’s list, such as
General Motors, achieved a zero percent rate by banking tax credits from
previous years when business was bad. But the more common gambit
involves moving revenues from parent companies to offshore subsidiaries
based in tax haven countries in the Caribbean, Europe, and elsewhere.

Tax dodging costs the U.S. about $300 billion per year.
Much of that lost revenue is from individuals, rather than
corporations. The country is cracking down on individual tax dodgers and
striking deals with countries like Switzerland and the Cayman Islands
that will help identify tax cheats starting in 2014. The corporate tax
avoidance problem is thornier, as it is generally done through entirely
legal methods. Coordinating international tax law in a way that would
minimize corporate tax trickery is very difficult under the current approach, and a paradigm shift in business tax law may be necessary to end the accounting practices that rob countries of tax revenue.

What really matters to business is not the statutory tax rate
but the effective tax rate — the percent of profits paid in taxes once
all the deductions, credits and other complex provisions of the tax code
are taken into account. What you don’t hear from business lobbyists is
that, in terms of the effective tax rate, the United States is slightly
below the average of the big industrial countries, at about 26 percent.

Source: Treasury Department

Steven Perlstein has a long profile piece on tax expert Marty Sullivan who has some interesting ideas for how to correct this tax inequity. Marty Sullivan figured out how the world’s biggest companies avoided billions in taxes. Here’s how he wants to stop them.