Democrats and Republicans alike will admit that the corporate tax system is riddled with loopholes written by industry lobbyists. Still, it’s astounding to review just how little America’s corporations manage to pay. According to a new study from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, twenty-five companies—led by Wells Fargo, AT&T, Verizon, and GE—received a combined $114.8 billion in subsidies from 2008 to 2010. The combined tax breaks for the 280 largest Fortune 500 companies that the report examined totaled nearly a quarter of a trillion dollars.
Although the United States ostensibly has the highest marginal corporate tax rate in the OECD, hardly any of the corporations in the study paid the official rate of 35 percent in recent years, with only a quarter coming close. The vast majority paid significantly less: an average 18.5 percent from 2008 to 2010 on $1.4 trillion in profits. In the past two years, the effective tax rate for all 280 companies averaged just 17.3 percent, less than half the statutory rate. A quarter of those companies—again, all members of the Fortune 500—paid less than 10 percent, while a smaller group actually received tax rebates.
In total, seventy-eight companies managed to pay zero or less in federal income tax in at least one of the years from 2008 to 2010. Instead of paying the $55 billion in taxes they owed (35 percent of $156 billion in profits), the government actually cut them a check, straight from the U.S. Treasury: $21.8 billion over three years. Thirty of those corporations enjoyed an aggregate negative rate over all three years, including: Pepco Holdings (-57.6 percent), General Electric (-45.3 percent), DuPont (–3.4 percent), Verizon (–2.9 percent), Boeing (–1.8 percent) and Wells Fargo (–1.4 percent). As the report’s authors put it, “most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo [and] Verizon . . . all put together.’ That’s an unacceptable situation.”