Three of the largest and most profitable US corporations paid no federal corporate income tax for the past three years. General Electric (GE), Boeing, and Pacific Gas and Electric Corporation (PG&E) had a combined pre tax profit of $25 billion, but paid no corporate income tax.
A joint study by the Citizens for Tax Justice (www. ctj.org) and the Institute on Taxation and Economic Policy (www.itepnet.org) found that these three companies — all from the Fortune 500 list and all of them profitable — paid no taxes for 2008, 2009, and 2010. It also found that 30 of the 280 companies studied had a negative income tax rate (that is, below zero) for this three year period even though their combined pre tax earnings totaled $160 billion.
Companies that paid no corporate tax included such industry leaders as Honeywell, Duke Power, and Exxon Mobil. Two mega large financial lenders, Capital One Financial and Wells Fargo, also made the list. Capital One Financial is an international and diversified credit card lending service. Wells Fargo is one of the Big Four banks. In 2011, it was the twenty-third largest US company.
According to the study, the huge multinational conglomerate GE was the worst offender. From 2008 through 2010, the company earned profits of $10.4 billion but had a negative $4.7 billion tax liability. In other words, its tax bill was less than zero. It also had a negative 45.3 percent tax rate even though the highest corporate tax rate for those years was 35 percent. Headquartered in Fairfield, Connecticut, GE manufactures well known consumer appliances and electronics in addition to its longstanding interstate marketing of electricity and energy delivery. In 2011, Fortune magazine ranks it as the sixth largest firm in the US and the fourteenth most profitable.
A spokesperson for GE disputed the results of the study, calling the findings “inaccurate and distorted.” “GE paid billions of dollars in taxes in the United States over the last decade, and we expect our overall tax rate will be approximately 30 percent in 2011,” the written statement said.
The study further found that 78 profitable companies making the Fortune 500 list did not pay federal corporate tax in at least one of the three focus years. In some cases, these companies received tax rebate checks. This news comes at the worst time for Washington politicos confronted with a $14.94 trillion deficit and whose various tax reform plans to trim that amount likely face defeat. Senate Republicans blocked the millionaire’s tax proposed by senate Democrats and supported by President Obama. The proposal has died a quiet death. The flat individual income tax rate proposed by presidential candidates Perry, Cain, and others faces stiff opposition for its tax increase on the middle class and its tax cuts for the wealthy.
Billions of dollars in government tax subsidies resulting from intensive congressional lobbying is one of the major reasons why these corporations can slash their taxes. Accelerated depreciation that permits write offs for equipment used in business faster than the equipment wears out is another reason. Legal corporate tax loopholes (which can generate tax rebates) play a role too. Thus, a multibillion corporation like GE — which spends more on lobbying than any other company — can be valued at $43 billion, have $751 billion in assets, and earn $150 billion in revenue and still pay no tax. $150 billion in revenue? That is a lot of zeros. Think about that the next time you flip on your lights.
