You and I paid more in federal income tax last year than Facebook, Federal Express, and Southwest Airlines combined.
I'm borrowing the language from a bumper sticker that was available at Citizens for Tax Justice when I interned there in the mid-1990s, but as a new report from the organization shows, even if the names may have changed a bit, the practice of tax avoidance by large corporations continues unabated.
"As a group, the ten companies [highlighted in the study] paid no federal income tax on $16 billion in profits in 2012, and they paid zero federal income tax on $57 billion in profits over the past five years," states the report. "All but one paid less than zero federal income tax in 2012; all paid exceedingly low rates over five years."
The corporations listed are: the oil and gas company Apache, Facebook, FedEx, GE, Interpublic (an advertising and marketing group), the utility company Pepco, Principal Financial, Ryder (the truck rental place), Southwest, and Tenet Healthcare.
The report lays out the many tax dodging tactics that these megacorporations have mastered, from tax breaks on executive stock options, to accelerated depreciation, which allows companies to claim wear and tear on their capital investments at a much faster rate than they actually wear out.
The consequence is a complete mockery of the 35 percent maximum corporate tax rate supposedly on the books.
"Even as profits for American corporations hit a sixty-year high in 2011, their effective tax rate hit a forty-year low, and the United States collects less in taxes as a percent of the total economy than every industrialized country in the world save Iceland," notes the Center for American Progress. "It's been forty-five years since corporations paid the full top tax rate, and twenty-six American companies avoided taxation altogether over the past four years."
Some of these companies are the ones mentioned in the Citizens for Tax Justice report. FedEx paid an effective federal income tax rate of negative 1.4 percent from 2008 to 2012, while "We bring good things to life" General Electric bettered it by shelling out federal tax dollars at an effective rate of negative 11.1 percent. In 2012, Facebook contributed to the exchequer at an effective federal income tax rate of negative 40.4 percent!
The gall of these companies is breathtaking, and so is the length to which they go to avoid contributing their fair share to the national account.
One favorite strategy of these companies is offshore havens, whereby they stash their profits in shady places all over the world in order to avoid paying taxes at home.
"Sixty of the largest U.S. corporations, according to a Wall Street Journal analysis, 'parked a total of $166 billion offshore last year,' shielding more than 40 percent of their profits from U.S. taxes," Robert Scheer writes for Truthdig. "They all do it, including Microsoft, GE and pharmaceutical giant Abbott Laboratories. Many, like GE, are so good at it that they have avoided taxes altogether in some recent years."
As Scheer points out, these companies expect a lot from the U.S. government. They fall back on the power of the United States when they get into trouble with foreign governments, and on the munificence of the Federal Reserve when they have to be bailed out at home. They expect the U.S. government to help fund scientific research, educate their work force, provide infrastructure, and help maintain law and order -- without wanting to contribute anything back.
Large companies "just don't feel they should have to pay for a system of governance, even though it primarily serves their corporate interests," Scheer writes. "The U.S. government exists primarily to make the world safe for multinational corporations, but those firms feel no obligation to pay for that protection in return."
It's a good thing you and I don't have the morals of big business. Otherwise, our country would cease to function.
If you liked this article by Amitabh Pal, the managing editor of the Progressive magazine, please check out his article entitled "California AG Represents New Brand of Indian-American Politicians."
Follow Amitabh Pal @amitpal on Twitter.