Twenty-seven multinationals paid no income tax in the US last year, despite reporting pre-tax profits.
The lucky 27 avoided more than $11 billion in taxes. They also received tax refunds and other incentives from the US government, which many characterize as corporate welfare.
USA Today compiled a list of the profitable S&P 500 companies which reported negative interest tax expenses, despite racking up big bucks. Many use tax loopholes to write off losses and receive tax refunds.
US companies can assign their profits to tax-free locations such as the Cayman Islands and other nations with lower corporation tax rates than the states.
The likes of Apple, Facebook, Goldman Sachs, and many more take advantage of overseas tax loopholes at the expense of the American taxpayer.
The largest Fortune 500 companies in the US keep more than $2.1 trillion in offshore profits, according to a report by Citizens for Tax Justice and the US PIRG Education Fund.
President Barack Obama wants to drop corporation tax rates from 35 percent to 14 percent, in an effort to claw back some of the money being ‘sheltered’ overseas.
Obama’s predecessor George W Bush tried that with the American Jobs Creation Act in 2004 and companies did bring back billions into the US, but the vast majority of it went straight back to shareholders.
The New York Times reports many of the largest multinationals proceeded to close US operations and move more profits offshore to cash in the next time a repatriation deal was offered.
Shares of the 27 companies are down 11 percent on average, which is more than twice the average 4.8 percent drop by the S&P 500 during the period in question.
When company profits are examined through the lens of corporate welfare, it becomes apparent that many multinationals and banks would not be so profitable were it not for the handouts they receive from the government, and indirectly from the taxpayer.
The big banks have grown since they were bailed out for being “too big to fail” and they continue to enjoy reduced interest rates, giving them an unfair, and arguably, undeserved advantage. Bloomberg estimated the banks got $83 billion in corporate welfare in 2013.
The biggest corporations receive even further advantages due to their influence over Washington, as evidenced by the Clintons’ controversial speaking fees from Goldman Sachs.
For example, News Corp, the parent company of the Fox News Channel and several other media brands, paid $3.9 million in contributions and $32.2 million on lobbying in return for $68 million worth of federal business.
General Motors spent $1.9 million on contributions, $63.5 million on lobbying and made $2.6 billion in federal business and $67.4 billion in federal support.
After a surprise win for Bernie Sanders in Michigan Tuesday night, his promise to reform the tax system might one day see companies keeping hold of their lobbying funds to pay their taxes.
A report by Citizens for Tax Justice and the Institute for Taxation and Economic Policy found 39 percent of 288 profit-making companies in the Fortune 500 paid zero or less in income taxes for at least one year between 2008 and 2012.
This piece was reprinted by RINF Alternative News with permission or license.