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Twelve Corporations Pay Effective Tax Rate of Negative 1.5% on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies

Twelve Corporations Pay Effective Tax Rate of Negative 1.5% on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies

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To better inform the public and lawmakers about how successful many American corporations have been in reducing or eliminating their federal income taxes, Citizens for Tax Justice is releasing a preview of its forthcoming major study of Fortune 500 companies and the taxes they paid — or failed to pay — over the 2008-10 period. Today’s release details
the pretax U.S. profits, federal taxes paid and effective tax rates of (in alphabetical order): American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo and Yahoo. CTJ’s full corporate report is scheduled for release this summer.
To better inform the public and lawmakers about how successful many American corporations have been in reducing or eliminating their federal income taxes, Citizens for Tax Justice is releasing a preview of its forthcoming major study of Fortune 500 companies and the taxes they paid — or failed to pay — over the 2008-10 period. Today’s release details
the pretax U.S. profits, federal taxes paid and effective tax rates of (in alphabetical order): American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, Honeywell International, IBM, United Technologies, Verizon Communications, Wells Fargo and Yahoo. CTJ’s full corporate report is scheduled for release this summer.

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Published by: Citizens for Tax Justice on Jun 01, 2011
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EMBARGOED for Release OnWednesday, June 1, 2011 at 12:01 am EDTContact:Bob McIntyre, 202-299-1066 ext. 22Anne Singer, 202-299-2066 ext. 27www.ctj.org
 Analysis: 12 Corporations Pay Effective Tax Rate of Negative 1.5%on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies
Exxon Mobil, Boeing, Verizon, Others Illustrate Why Revenue-Raising Reform is Needed
Washington, DC – To better inform the public and lawmakers about how successful manyAmerican corporations have been in reducing or eliminating their federal income taxes, Citizensfor Tax Justice is releasing a preview of its forthcoming major study of Fortune 500 companiesand the taxes they paid — or failed to pay — over the 2008-10 period. Today’s release detailsthe pretax U.S. profits, federal taxes paid and effective tax rates of (in alphabetical order):American Electric Power, Boeing, Dupont, Exxon Mobil, FedEx, General Electric, HoneywellInternational, IBM, United Technologies, Verizon Communications, Wells Fargo and Yahoo.CTJ’s full corporate report is scheduled for release this summer.
1
The analysis serves to illuminate the current corporate tax debate in Washington, DC, anddemonstrates that real corporate tax reform is long overdue. President Obama has indicated thathe wants to reduce or eliminate corporate tax subsidies, but use all the increased revenue tolower the statutory corporate tax rate. Lobbyists for big business, along with many Republican political leaders, reject this “revenue-neutral” approach, and call for changes that would
reduce
corporate tax payments by trillions of dollars over the upcoming decade.In contrast, Citizens for Tax Justice and many others take the position that at a time when our country faces huge long-term deficit problems, corporate tax reform should be significantlyrevenue-
 positive
, as it was under President Ronald Reagan in 1986.
2
Since then, the corporate taxcode has once again become overburdened with loopholes, shelters and special tax breaks.Citizens for Tax Justice and 250 organizations from all 50 states with constituencies acrossAmerica have signed a letter to Congress stating that “most, if not all, of the revenue saved fromeliminating corporate tax subsidies should go towards deficit reduction and towards creating thehealthy, educated workforce and sound infrastructure that will make our nation morecompetitive.”
3
 The 12 corporations analyzed are major, nationally recognized companies in a range of industries, including manufacturing, energy, services, transportation, high tech and finance. Theyall made significant profits in 2010 and over the 2008-10 period..
Citizens forTax Justice
 
CTJ
1
CTJ’s comprehensive corporate tax reports in the 1980s played a key role in the enactment of the Tax Reform Act of 1986. See, e.g.,
Corporate Taxpayers & Corporate Freeloaders, Four Years of Continuing, Legalized Tax Avoidanceby America’s Largest Corporations, 1981-84
,www.ctj.org/pdf/corp0885.pdf.
2
Reagan’s Tax Reform Act of 1986 was designed to increase corporate income tax payments by 34 percent.
3
“Corporate Tax Reform: Consumer Groups, Labor Unions, Faith-Based Groups at Odds with Obama on Goals,”www.ctj.org/taxjusticedigest/archive/2011/05/corporate_tax_reform_consumer.php.
 
Page 2 of 3
#
From 2008 through 2010, these 12 companies reported $171 billion in pretax U.S. profits.But as a group, their federal income taxes were negative: –$2.5 billion.
#
All but two of the dozen companies enjoyed at least one no-tax year over the 2008-10 period,despite reporting substantial pretax U.S. profits in those no-tax years.
#
Eight of the twelve companies reported net tax benefits over the full three-year period.The table that follows shows the results of our analysis. It includes General Electric, whose tax-avoiding ways have been widely reported.
4
Over the 2008-10 period, GE enjoyed $4.7 billion intax benefits on top of its $7.7 billion in pretax U.S. profits. Not a single one of the companies paid anything close to the 35 percent statutory tax rate. In fact,the “highest tax” company on our list, Exxon Mobil, paid an effective three-year tax rate of only14.2 percent. That’s 60 percent below the 35 percent rate that companies are supposed to pay.And over the past
two
years, Exxon Mobil’s net tax on its $9.9 billion in U.S. pretax profits wasa minuscule $39 million, an effective tax rate of only 0.4 percentHad these 12 companies paid the full 35 percent corporate tax, their federal income taxes over the three years would have totaled $59.9 billion. Instead, they enjoyed so many tax subsidies thatthey paid $62.4 billion
less
than that.If just these 12 companies had paid at a 35 percent tax rate over the past three years, total federalrevenues from corporate taxes would have been 12 percent higher than they actually were.“These 12 companies are just the tip of an iceberg of widespread corporate tax avoidance,” saidBob McIntyre, director of Citizens for Tax Justice. “Our elected officials have a duty to theAmerican public to make reducing or eliminating the vast array of corporate tax subsidies thecenterpiece of any deficit-reduction strategy.”Here is the information on the 12 illustrative companies. Technical notes follow on page 3.
Twelve Corporations: Their U.S. Pretax Profits and Their Federal Income Taxes, 2008–2010
$-millions 2010 2009 2008 3 year totalsCompany US Profit FedTax FedRate US Profit FedTax FedRate US Profit FedTax FedRate US Profit FedTax FedRate
General Electric5,0793,25364.0%305833nm2,94865122.1%
7,722 –4,737 –61.3%
 American Electric Power1,8691347.2%2,01457528.6%2,0161648.1%
5,899 545 9.2%
Dupont94910911.5%1802312.8%995141.4%
2,124 72 3.4%
Verizon Communications11,9637055.9%12,2616115.0%8,2943654.4%
32,518 951 2.9%
Boeing4,45030.1%1,4941369.1%3,791391.0%
9,735 178 1.8%
Wells Fargo16,4861,3458.2%21,7973,96718.2%11,0871,94117.5%
49,370 681 1.4%
FedEx
not available yet*
2,138150.7%885384.3%
3,023 23 0.8%
Honeywell International1,24348238.7%1,723281.6%1,93747624.6%
4,903 34 0.7%
IBM8,8611902.1%9,4044735.0%8,2083384.1%
26,473 1,001 3.8%
Yahoo855829.6%35410228.8%45312527.5%
1,663 145 8.7%
United Technologies2,543441.7%2,5391987.8%2,85455019.3%
7,935 791 10.0%
Exxon Mobil7,41999213.4%2,49095438.3%9,7452,74428.2%
19,655 2,783 14.2%These 12 companies 61,719 –2,196 –3.6% 56,090 –6,293 11.2% 53,213 5,989 11.3% 171,021 –2,500 –1.5%
NOTES: Negative taxes and rates reflect tax benefits received rather than taxes paid. “nm” = not meaningful.*FedEx’s fiscal year ends 5/31. Its 10-K for June 1, 2010 to May 31, 2011 will be filed in mid-July of 2011.
4
“G.E.’s Strategies Let It Avoid Taxes Altogether,” David Kocieniewski,
The New York Times
, Mar 24, 2011, p. 1.

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