Why do many large corporations such as ExxonMobil pay no income tax?

[spin]

Should Big Oil Corporations Pay Their Income Taxes? 61 Senators Vote No.

On June 9, 2010, Senator Bernard Sanders of Vermont posted the corporate income tax report of Exxon Mobil in the Congressional Record and took to the floor of the Senate to note:

Last year, ExxonMobil, the most profitable corporation in the history of the world, reported to the SEC that not only did it avoid paying any Federal income taxes, it actually received a $156 million refund from the IRS. So middle-class Americans, people in Vermont and all over this country who are working 50 and 60 hours in order to provide the necessary income they need to pay the bills for their families, those folks go out and they pay their income tax. They may not be too happy about it, but they understand that in a civilized society you have to pay taxes to pay the bills of government.

Not ExxonMobil. The most profitable corporation in the history of the world last year not only avoided paying any Federal income taxes, it actually received a $156 million refund from the IRS. If that makes sense to anybody— maybe it does—it surely does not make sense to me….

ExxonMobil is the same huge oil company that has had enough money to provide a $398 million retirement package to its outgoing CEO, Lee Raymond, just a few years ago. They made more money than any corporation in the history of the world last year. They did not pay any Federal taxes. In fact, they got a huge refund from the Federal Government. And some years ago this particular corporation paid out $398 million in retirement package for its CEO. I do not think that makes a whole lot of sense. I think we ought to end that nonsense and end it now. This country is at record-breaking deficits. We cannot allow large corporations such as ExxonMobil not to pay taxes.
http://www.truth-out.org/article/most-corporations-dont-pay-income-taxes

What The Top U.S. Companies Pay In Taxes
Christopher Helman, 04.01.10, 03:00 PM EDT

HOUSTON -- As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.

The most egregious example is General Electric ( GE - news - people ). Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.

***snip***

But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.

***snip***

Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations."
http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes.html

Most U.S. Corporations Pay No Income Tax
August 13, 2008, 8:00 am Legal/Regulatory

Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress.

The study, which is likely to add to a growing debate among politicians and policy experts over the contribution of businesses to Treasury coffers, did not identify the corporations or analyze why they had paid no taxes. It also did not say whether they had been operating properly within the tax code or illegally evading it.

The study covers 1.3 million corporations of all sizes, most of them small, with a collective $2.5 trillion in sales. It includes foreign corporations that do business in the United States.

***snip***

In 2005, one in four large United States corporations paid no taxes on revenue of $1.1 trillion, compared with 66 percent in the overall pool. Large corporations are those with at least $250 million in assets or annual sales of at least $50 million.

Joshua Barro, a staff economist at the Tax Foundation, a conservative research group, told The New York Times that the largest corporations represented only 1 percent of the total number of corporations but more than 90 percent of all corporate assets.

The vast majority of the large corporations that did not pay taxes had net losses, he said, and thus no income on which to pay taxes. “The notion that there is a large pool of untaxed corporate profits is incorrect.”

In 2004, a G.A.O. study said that 7 in 10 of all foreign corporations doing business in the United States, or foreign-controlled corporations, paid no taxes from 1996 through 2000, compared with 6 in 10 United States corporations.
http://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/

[Hawkeye-X]

1. Because they have assholes for lawyers that finds loopholes the size of texas

and uses illegal tax shelters to keep the rich happy and the rich richer.

Fuck them. Every single Republican richies and corporations who has not paid taxes in a long time will need to pay 200% in taxes as a major punishment and a hard lesson for them because greed is bad. That will kickstart the economy. If the corporations want to continue to pay no taxes, then they must hire the equivalent of their tax payments in number of people x 10.5% x 5.12% x 72.3% + 100 people.

If they can't do that, then the money has to be seized so the government can hire more people to do more necessary things like rebuilding the infrastructure that has been long neglected.

Hawkeye-X

[Honeycombe8]

10. Oh, yeah. Now, there's a plan. Start seizing the companies....

that's good for business.

With no companies here, who would we work for? Are you going to start a company, knowing the govt will take everything from you?

I vote a big NO on that idea.

It's like I tried to explain to other posters a few days ago: it's not the main tax rate that matters as much for corporations and wealthy people; it's the deductions and credits and subsidies. That's how Exxon ended up paying nothing. It's tax rate certainly isn't zero.

That's partly why Simpson's "plan" to help the economy takes away the mortgage interest deduction. That and property tax deduction are for millions of the middle class the ONLY tax deductions they get. He knows how important deductions are. He said they'd do that so the tax rate could be lowered and simplified. Yeah, right. They'll lower the tax rate for the middle class, all right. But not enough to compensate for losing that deduction. And the poor will be happy enough, because they don't have mortgages or property taxes. So that means the liberals won't rise up and vote angrily.

And that's a sneaky way for them to AGAIN give a bigger tax cut to the wealthy (they'll say it's because their interest deductions are larger). Bank on it. You heard it here first.

[spin]

25. Is there any fair solution that might work?

Surely we can get these big corporations to pay something rather than nothing. This would be an improvement.

[social_critic]

35. My analysis shows a more complex answer is possible

ExxonMobil paid 7.6 billion in US income tax in previous years. It's possible they overpaid and took credits for the overpayment the following year. As we'll recall, 2008 was a year with very high oil prices, which collapsed in the third quarter as the Bush economic crisis hit.

Big oil usually hides their overseas profits in tax heavens such as the British Virgin Islands, and the Cayman Islands. Some corporations pool their foreign revenue in the Netherlands - which means they end up paying their income tax there.

This is a troublesome issue, if US companies dodge taxes by setting up dummy corporations abroad in countries where taxes are lower. I know this is a fairly crazy sounding idea, but one answer would be to lower corporate income tax (to encourage them to move their corporate shells to the USA) and use a Value Added Tax like they do in the European Union. Another trick would be to tax their overall book value - a 0.5 % tax on Exxonmobils book value (which ought to be around $300 billion) would pick up a $1.5 billion tax. This could be deductible against income tax, but it would let us make sure they can't skip taxes in any tax year.

[Blue_Tires]

46. +1000

[msongs]

2. if they are "persons" they should pay the same tax as real people nt

[provis99]

3. Why? Because America is the greatest country on Earth, that's why!

:sarcasm:

[RufusTFirefly]

9. Amen! U-S-A! U-S-A!

The contributions large corporations make to the tax base and to employment totals are trumpeted by their defenders.

But when the actual numbers are revealed?

Crickets.

[napi21]

4. That's an easy answer. TAX LOOPHOLES written especially

for specific corps. so they can wrote off many things the rest of us never have cause to encounter. That's been going on forever! They lobby specific congressmen to isert things into the tax code to benefit them! That's the exactly the reason I've recommended elimination of all dductios except personal exemptions. If that were done,everybody's rate would be able to be lowered and the very low income erners wouldn't own anything at all!

[Mojambo]

5. Because they write the laws. n/t

[Catshrink]

6. Why do you hate America?

:shrug:

[Phlem]

8. ....

:rofl:

-p

[Historic NY]

7. PAY nothing & get corporate welfare....the new welfare Queens.

[spin]

20. Isn't America great? (n/t)

[rhett o rick]

11. They own our government. nm

[Skittles]

12. CORRECT

[guitar man]

42. Exactly

They own it lock stock and barrel and if anybody actually got into office that could actually threaten such ownership they'd have 'em pushing up daisies. :(

[rhett o rick]

43. And I wouldnt be surprised if that was very clearly explained to Obama. nm

[RegieRocker]

13. They buy Congress persons that's why and their too big to fail

[spin]

14. The United States, of the corporations, by the corporations and for the corporations ...

God bless the corporations from shining shore to shining shore and also overseas in foreign lands.

Let's all bow to the almighty corporations.

Without them we would might be free.

[lonestarnot]

15. K & R!

[lonestarnot]

16. The new serial killer gov. in AZ is advocating corp tax cut from 7 something to 5 something which

homeowners will then have to pay.

[Skidmore]

22. AZ will buy this

lock stock and barrel. Counter offer to corporatations in every state should be, you want the tax breaks, then build new roads with your profits or build other infrastructure since you will be using them. It's ass backwards now, building infrastructure to support businesses which will turn around and leave. Furthermore, no city or municipality should ever again build a stadium or arena for any professional team.

[Greyhound]

26. Which is absolutely hysterical since she has tried this before and the companies being courted told

her straight out that tax breaks were meaningless to them. They won't come because AZ cannot supply them with the people they need.

But the previous response is exactly right, the morans will buy this, guaranteed.

[hobbit709]

17. Because "Personhood" gives them more privileges than we have.

[DailyGrind51]

18. They set up bogus shell companies that are designed to lose money to

offset gains in their main companies, making their profits appear less than they are.

[spin]

19. HOW DO WE correct this? ...

Is it possible that we could get Democrats in Congress and Obama to tackle this problem in the next session?

I think it's only reasonable that both the rich and the big corporations pay a fair share to help our country overcome its economic problems. If the federal budget deficit and the national debt are so important, then we do need to stop borrowing money from China and balance our own budget.

Would a different approach to taxing like the Fair Tax, the Value Added Tax or the Flat tax simplify the system and bring in the needed revenue?

Finally, why don't the tea-baggers bitch about the big corporations not paying taxes? Is it true that they are financed by those bog corporations?

[Skidmore]

21. Because they need tax breaks to create new jobs....

[spin]

23. Well since many corporations are paying NO taxes ...

you would think that thy would be creating a LOT of jobs.

[Skidmore]

24. Yes, the irony is so thick it reeks.

[WillyT]

27. Because They Don't Want To...

:shrug:

[newtothegame]

28. Because the owner's pay taxes.

If you focus on the entity of a "corporation" paying taxes (which learns nothing from paying taxes, because a corporation can't think or feel) , you let the fat-cat owners off the hook.

[spin]

29. Obviously that needs to change also ...

at least the Democrats (or many of them) realize this.

Would changing our tax system to an entirely different system, such as a VAT, a flat or a fair tax work?

I realize that such a change would be almost impossible with the current structure of Congress.

[newtothegame]

38. Unfortunately I doubt we'll get there because too many Democrats and most on DU...

knee-jerk react to the word "corporation" and focus on that, letting the true owners completely off the hook.

[spin]

41. That's a good point. (n/t)

[knotwurstforware]

30. recommend

why do you hate America?
:sarcasm:

edit for spelling

[spin]

31. I love the America I was born in and grew up in ...

in the 50s and 60s.

I hardly seems to be the same country today. Today we are a country of the corporations, by the corporations and for the corporations. The average voter be damned.

[knotwurstforware]

32. yes

another kick

[knotwurstforware]

33. yep

another kick

[Tierra_y_Libertad]

34. Because those that have the gold buy those that make the rules.

[spin]

36. How can the voters cange this?

any ideas. Would term limits help?

[hedgetrimmer]

44. By action as a citizen, not a voter...

in mass the people have leverage, for example if 35% of US citizens did not file taxes that was supposed to be payed to the government or filed but did not pay as an act of civil disobedience or protest the government would have to do something or collapse. Perhaps 20% of citizens stop paying on homes and cars or credit cards, and say that same 20% removed their money from the bank... the system would have a jumbo monkey wrench in it. The power we have is our money, not one person with 10,000 in the bank but millions of people with millions of dollars that can cripple the system.
The most difficult part is convincing the people that they have power, and then convincing them to use it.

[spin]

47. True, we have more power than we know.

We need a leader who can convince us to use it.

The problem is that he may not be allowed to survive.

[AlabamaLibrul]

37. when did you stop beating your wife? n/t

[Jeffersons Ghost]

39. K&R

[Initech]

40. I actually see a positive quality in Citizen's United now.

And that is - by CU's logic, corporations are people. Money is free speech. Couldn't we start taxing them as such?

[Initech]

45. Make 'em pay!!!