Magazine article The American Prospect

It's Your Money They're Wasting

Magazine article The American Prospect

It's Your Money They're Wasting

Article excerpt

In September, my group, Citizens for Tax Justice, released a major study on corporate tax avoidance. We looked at 275 of the largest and most profitable Fortune 500 companies and found that almost a third managed to pay nothing (or less) in federal income taxes in at least one of the first three years of the Bush administration. Over that period, the 275 companies reported $1.1 trillion in pretax U.S. profits to their shareholders, but told the IRS that they'd made less than half of that. One company, General Electric, enjoyed $9.5 billion in tax breaks over the three years. And the lion's share of the blame for these outrages, and the concurrent collapse of corporate tax revenues, can be placed on President Bush and the GOP Congress, which put huge new corporate loopholes in place while refusing to crack down on offshore corporate tax sheltering and other abuses.

Our study generated headlines nationwide. But the reactions from corporate America and our lawmakers have been underwhelming. Only a few corporations have challenged our figures directly, and for good reason: All of the information in our study came straight out of their annual reports. My retort to companies that say they didn't avoid paying taxes is, are you lying now or were you lying in your audited financial statements?

Which is not to say that some companies didn't complain in other ways. For instance, Boeing's annual report shows that it not only paid no federal income tax, it actually received tax rebates--i.e., checks from the Treasury--of more than a billion dollars over the 2001-03 period. Boeing insisted to The Washington Post, however, that we could have computed its tax bill as $1.3 billion had we merely counted $2.3 billion in taxes it didn't pay due to loopholes.

Likewise, United Technologies weirdly defended its 1.1-percent tax rate over the 2001-03 period by pointing out to The Hartford Courant that it "spent heavily on deductible items in the years covered by the study."

Wachovia, which was featured in a PBS special earlier this year about the bank's massive tax-sheltering activities, acknowledged that it got a tax rebate of $164 million in 2002 despite $4.1 billion in pretax U.S. profits. Yet a company spokeswoman told the Winston-Salem Journal that "Wachovia is committed to paying its fair share of taxes. …

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