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Corporate Tax Loopholes Under Scrutiny

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by Tim Walker

As state governments struggle with bleak fiscal outlooks in 2012 and drastic budget cuts continue to take affect, many citizens still assume that lawmakers have tapped into every available source of revenue. Still

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, a creeping sense that not everyone has been paying their fair share has shifted the conversation.

Widespread news coverage in 2011 of Wall Street shenanigans, the growing income gap and the shrinking middle class has heightened public awareness of the disproportionate burden placed on working families – while corporations exploit loopholes in the tax code to avoid any shared responsibility. President Obama proposed closing some corporate tax loopholes to help pay for his job plan and is expected to make tax fairness a central issue in his reelection campaign.

A recent report by the Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) reveals why so many Americans are outraged. The study shows that states may have lost a significant amount in corporate tax revenue during the peak recession years of 2008-2010. In analyzing the tax returns of 265 of the richest S&P 500 corporations during those years, the CTJ and ITEP found that the companies reported $1.33 trillion in domestic profits, but paid states only about half of what they would have if they had paid at the average corporate income tax rate of all states. The report also found that 68 corporations reported paying zero state corporate taxes in at least one year between 2008 and 2010.

“What we’re talking about here is a class of multi-state and multi-national tax dodgers,” says Susan Kennedy, a tax attorney and manager for Education Funding and Revenue at the Alabama Education Association.

Read the full story at NEAToday.org.

Reader Comments

  1. Kerry Hyman

    I’m not an expert on corporate tax loopholes. However, when a USA corporation like GE records profits of $14.2 BILLION, $5.1 BILLION of which came from the USA (over 1/3 of their world profits), then pays ZERO taxes to the USA treasury, and claims a tax return benefit of $3.2 BILLION, to put it mildly; something doesn’t add up! Especially when you consider that there were over 32,000 more employees working for GE in China than there are in the USA.
    And how did all these USA corporations (GE, Exxon/Mobil, Whirlpool, Scott’s paper products, Hewlett Packard, etc.) evolve into “multi-national corporations” which essentially enables them to park their hundreds of BILLION profits (most of which were garnered from the USA) in off shore banks in an effort to avoid contributing ANYTHING to the USA treasury, their largest customer from whom they extract their vast fortunes. Yet all you hear from the GOP is: Taxes are too high on our “job creators, or ” taxes are stifling our job creators,” and “the USA has one of the highest corporate tax rates in the world…” doesn’t it mak you wonder… Plus, if you look into it like I have, the tax burden for our wealthiest citizens before the 1980s was around 70%. And back around the Eisenhower administration in the 1950s, the tax rate for our wealthiest citizens was around 90%.
    My GOP representative, Joseph Pitts, disclosed to me, in a reply to one of my letters inquiring about the subject of taxation for our wealthiest citizens, the following (I will paraphrase): “No matter what rate you tax the rich, with the exemptions, and write offs, like long term capital gains, stock options, and other write-offs, they only pay between 15 & 19%…”
    The last time I checked, the middle class tax bracket was around 35%; twice what the wealthy are expected to pay.
    Is it any wonder why we have a revenue shortfall? And the GOP want to give them MORE, MORE, MORE!!!
    Disgusting!

    Reply

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