Majority of Rich Corporations Paid Zero Federal Income Tax

THE JOURNAL RECORD, July 18, 1986 | Go to article overview
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Majority of Rich Corporations Paid Zero Federal Income Tax


WASHINGTON (AP) - More than half the nation's richest corporations paid no federal income tax in at least one of the last five years and many received refunds of taxes paid in previous years, a labor-financed research group reported Thursday.

A report prepared by Citizens for Tax Justice concluded that 250 giant corporations - all of them profitable - paid an average tax rate of 14.9 percent on earnings of $388 billion during the 1982-85 period. That is about the same tax rate paid by an average family making $45,000 a year.

The study said 130 of those 250 companies paid no federal tax or received refunds during at least one of the years from 1981 through 1985. Forty-two paid zero or less in each of the years 1982 through 1985.

Those 42 corporations included some of the best-known names in American business, including American Telephone & Telegraph, with $24.9 billion in profits over the four years; DuPont, with $3.8 billion in profits; Pepsico, $1.9 billion; Xerox, $670 million; and General Mills, $1.2 billion in profits.

""For the vast majority of American families who pay their federal income taxes year in and year out, the idea of a "no-tax year' is almost inconceivable,'' Robert S. McIntyre, director of federal tax policy at Citizens for Tax Justice, said in releasing the report. ""But for most of America's largest corporations, no-tax years are now commonplace.''

A spokesman for AT&T, Herb Linnen, said in a statement that, ""with the exception of one very unusual year, AT&T has been a substantial federal income tax payer. Over the four-year period cited in the report, AT&T incurred federal income taxes of $750 million. We have seen this group's studies before and they are flawed. They misread financial statements and they fail to take into account deferred taxes.''

In 1984, he said, the company recorded a net loss for tax purposes due to the break-up of the Bell System, to low earnings and to employment reductions that followed the break-up.

Asked how much AT&T paid in taxes over the period, Linnen declined to comment.

The report was released as a Senate-House conference committee began working on a compromise plan for overhauling the income tax. The separate bills passed by the House and Senate would make it more difficult for corporations to escape the tax collector in years in which they turn a profit.

This is the third annual corporate-tax survey by Citizens for Tax Justice, a Washington-based research organization financed in part by labor unions. Most of the figures are based on reports the companies prepare for stockholders and file with the Securities and Exchange Commission.

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