82 Major Firms Paid No Federal Taxes

Eighty-two major U.S. corporations paid no federal income taxes at least once in the last three years, even while they reported more than $100 billion in U.S. profits during the years they paid no taxes, a study released Wednesday found.

Authors of the study, the liberal policy groups Citizens for Tax Justice and the Institute on Taxation and Economic Policy, said the finding reflected a broader trend of increased tax breaks that had allowed corporations to pay a smaller share of the nation’s total tax burden.

Among the companies cited: AT&T; Corp., Boeing Co., Prudential Financial Inc., Time Warner Inc., Caterpillar Inc., Pfizer Inc. and Walt Disney Co.

“When people in corporations aren’t paying their fair share, someone has to pick up the bill,” said Rep. Lloyd Doggett (D-Texas) at a Capitol Hill briefing unveiling the study. Instead, the increased burden falls on small businesses and the general public, Doggett and others said.

Robert S. McIntyre, coauthor of the report, said the number of “tax-avoiding companies reflects the results of aggressive corporate lobbying and a White House and a Congress eager to do the lobbyists’ bidding.”

The share of U.S. taxes paid by corporations has been declining for decades. Some policy experts say a lower corporate tax burden is the only way for the U.S. to remain competitive as other countries, particularly in Europe, decrease theirs.

“Raising corporate taxes is not going to happen. It would be the U.S. shooting itself in the foot,” said Chris Edward, director of tax policy for the Cato Institute. But he added it was unfair that some corporations paid a different tax rate from others.

The study examined public filings from 275 of the Fortune 500 companies, which reported $1.1 trillion in pretax profits for the years 2001-03. Had they been taxed at 35%, the ostensible corporate income tax rate, the companies would have paid $375 billion in income taxes over the three years. But a series of what the study called “loopholes and other tax subsidies” cut their combined bill by $175 billion.

Half of that -- $87.1 billion -- went to 25 corporations, including $9.5 billion in tax breaks to General Electric Co. alone, the study said. On average, the companies’ tax rate fell to 17.2% in 2003 from 21.4% in 2001.

Of the 82 companies that paid no taxes at least once during the study period, 30 paid no taxes in two or all three years, the study said. Some companies generated so many “excess tax breaks” that they received rebate checks from the government, the study said.

The low tax rates were concentrated in a few key industries: aerospace and defense, transportation, petroleum, utilities and electronics.

A spokesman for GE disputed the study’s figures. “We’ve protected and created high-paying, high-value jobs in the United States,” David Frail said.

Increased offshore tax shelters as well as Bush administration tax cuts fueled the plunge in tax payments, the study found.

The study illustrated the uneven levels of corporate tax payments, which have fueled debate among legislators and policy officials, the authors said. It followed an April report by the Government Accountability Office, which found that 61% of U.S. corporations paid no federal income taxes during the economic upturn from 1996 to 2000.