Many big US corporations pay very little in taxes

Updated: Wednesday February 26, 2014 MYT 12:50:30 PM

Many big US corporations pay very little in taxes

NEW YORK: Many of the most profitable U.S. corporations paid little or no federal income tax from 2008 to 2012, according to a five-year study issued on Tuesday by a left-leaning tax activist group.
Citizens for Tax Justice looked at 288 profitable Fortune 500 companies and said that 26 of them – including Boeing Co <BA.N>, General Electric Co <GE.N> and Verizon Communications Inc <VZ.N> – paid no federal income tax in the five-year period.
The group also said that 111 of the 288 companies paid no federal income tax in at least one of the five years measured.
In a reflection of how the tax code’s complexity leaves many issues open to question, corporations sometimes dispute the way Citizens for Tax Justice calculates its numbers.

Some of the companies singled out took exception to the findings. GE spokesmanSeth Martin said: “For each year cited by Citizens for Tax Justice, GE paid income taxes in the U.S., as well as billions in other state, local and federal taxes in the U.S.”

He added, “CTJ inaccurately uses the current tax provision – a book accounting number – to make definitive statements about our U.S. income taxes. This is not the same as the cash income tax that we pay for a given year.”
A key player in Washington’s tax debate, Citizens for Tax Justice regularly issues studies making similar findings about corporate taxes. U.S. lawmakers often cite them in criticizing the tax code as too complex and riddled with loopholes.
Despite complaints about it from across the political spectrum, the tax code seldom changes. It has not been thoroughly overhauled in 27 years. Congress is unlikely to do that in 2014, said Senate Republican Leader Mitch McConnell.
“I have no hope for that happening this year,” he told reporters at the U.S. Capitol on Tuesday, blaming lawmakers’ stubborn fiscal gridlock on Democrats seeking tax increases.
Republican Representative Dave Camp, who heads the top tax-writing committee in the House of Representatives, is slated to unveil tax reform draft legislation on Wednesday, though it is widely expected to sit on the shelf with previous such drafts.
One of the main obstacles to reform is the abundance of tax breaks in the code that benefit corporations and individuals, lowering the effective tax rates of both and giving them ample reason to resist tax changes that would harm their interests.
“Corporate lobbyists incessantly claim that our corporate tax rate is too high, and that it’s not ‘competitive’ with the rest of the world,” said Robert McIntyre, director ofCitizens for Tax Justice and the study’s lead author.
“Our new report shows that both of these claims are false,” he said, contending that most large corporations pay nowhere near the statutory 35-percent U.S. corporate income tax rate due to tax breaks that lower their effective tax rates.
“And far too many aren’t paying U.S. taxes at all. Most multinationals are paying lower tax rates here in the United States than they pay on their foreign operations,” he said.
Boeing spokesman Chaz Bickers said the aerospace manufacturer’s tax bills are largely deferred until it starts generating revenue from airplane sales. “We play by the rules. We pay our taxes,” he said, adding Boeing’s total effective tax rate for 2013 was 26.4 percent.
Verizon spokesman Bob Varettoni said the telecommunications group complies with all tax laws and pays its fair share of taxes. He said Verizon paid more than $2.9 billion in income taxes from 2008 to 2012.- Reuters

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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