Collective Conscious

Steve Benen:

The lat­est study from Cit­i­zens for Tax Jus­tice and the Insti­tute on Tax­a­tion and Eco­nomic Pol­icy should lend cre­dence to the larger “Occupy” movement.

Many of this country’s biggest com­pa­nies paid no fed­eral taxes — or even made money through cred­its and refunds from the gov­ern­ment — over the past three years by using an array of loop­holes and tax breaks, accord­ing to a report released Thursday.

The authors exam­ined the finances of 280 cor­po­ra­tions from 2008 through 2010 and found that 30 paid zero taxes or used loop­holes to wind up with neg­a­tive tax rates. Local util­ity Pepco Hold­ings paid the low­est rate of all the firms inves­ti­gated, clock­ing in at nearly minus 58 percent.

Under the fed­eral tax code, cor­po­ra­tions are sup­posed to pay 35 per­cent of their prof­its in taxes. But the study found many of the com­pa­nies used legal tax breaks that allowed them to pay lower rates than ordi­nary Americans.

Plenty of politi­cians com­plain about the larger 35% cor­po­rate tax rate, which is high by inter­na­tional stan­dards. But that assumes cor­po­ra­tions are actu­ally pay­ing it — and they’re not.

As Pres­i­dent Obama put it in his State of the Union address, “[O]ver the years, a parade of lob­by­ists has rigged the tax code to ben­e­fit par­tic­u­lar com­pa­nies and indus­tries. Those with accoun­tants or lawyers to work the sys­tem can end up pay­ing no taxes at all. But all the rest are hit with one of the high­est cor­po­rate tax rates in the world. It makes no sense, and it has to change.”

It’s why the notion of “cor­po­rate tax reform” has merit. For the right, the goal is to bring down the 35% rate, but for the left, the goal is to start get­ting these large, pros­per­ous com­pa­nies to start pay­ing some­thing.

The Cit­i­zens for Tax Justice’s report added, “[J]ust as work­ers pay their fair share of taxes on their earn­ings, so should suc­cess­ful busi­nesses pay their fair share on their suc­cess. But today cor­po­rate tax loop­holes are so out of con­trol that most Amer­i­cans can right­fully com­plain, ‘I pay more fed­eral income taxes than Gen­eral Elec­tric, Boe­ing, DuPont, Wells Fargo, Ver­i­zon, etc., etc., all put together.’ That’s an unac­cept­able situation.”