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10 Facts About Corporate Taxes That Will Make Your Blood Boil

As the rest of us fill out our federal tax returns this year, we can all take great comfort in the fact that many of the largest corporations in the United States are not paying any federal taxes at all.  Over the past couple of decades, multinational corporations have become incredibly skilled at avoiding taxes.  It has become routine for big companies to shift profitable operations to divisions in other countries where tax rates are lower.  It has also become routine for big companies to set up “sham headquarters” in tax havens around the world.  Many U.S. corporations have even renounced their status as American companies in order to avoid paying taxes.  All of this has had a dramatic impact on the income of the federal government.  Corporate taxes now account for less than 7 percent of all federal revenue.  Back in the 1950s they accounted for about 30 percent of all federal revenue.  Meanwhile, the 35 percent corporate tax rate in the United States is chasing companies (and the accompanying good jobs) out of the United States at a blinding pace.  In a world where big corporations will go to any lengths to “game the system”, this is absolutely devastating our economy.

The facts that you are about to read will probably make you really mad.  They are meant to make you mad.  They are meant to help you understand that our tax system is deeply, deeply broken.  The big multinational corporations do not pay their share of taxes, our representatives in Washington D.C. admit that they are always several steps behind the hordes of corporate tax lawyers and economic activity is being pushed out of the United States by our ridiculously high corporate tax rate.  Basically, our corporate tax policy is a complete and total mess.

The following are 10 facts about corporate taxes that will likely make your blood boil….

#1 Once Japan’s corporate tax rate goes down in April, the United States will have the the highest corporate tax rate in the developed world.

#2 In the United States, the corporate tax rate is 35 percent.  In Ireland, it is only 12.5 percent.  Needless to say, hundreds of American companies have been moving at least some of their operations over to Ireland.

#3 As corporations have become experts at gaming the system, their contribution to federal revenue has gone way down.  Back in the 1950s, corporate taxes accounted for about 30 percent of all federal revenue, but in 2009 corporate taxes accounted for just 6.6 percent.

#4 Switzerland has become an extremely attractive tax haven for multinational corporations.  In fact, some cities in Switzerland do a booming business in setting up sham headquarters for foreign corporations.  For example: Zug, Switzerland is home to 26,000 people and 30,000 companies.

#5 Transocean, the owner of the rig involved in the BP oil spill, has approximately 13,000 employees in Houston, Texas and about a dozen or so employees in Zug, Switzerland.  But by moving their “headquarters” to Zug for tax purposes, Transocean has saved about 2 billion dollars.

#6 According to the New York Times, General Electric made a total of 14.2 billion dollars in profits last year.  So how much did they pay in taxes to the U.S. Treasury?  According to the New York Times, not one penny was paid.  However, General Electric disputes this.

#7 Even though Boeing receives billions in federal subsidies every year and even though it has a bunch of juicy government contracts it did not pay a single penny in federal corporate income taxes from 2008 to 2010.

#8 Exxon-Mobil paid $15 billion in taxes in 2009, but not a single penny went to the U.S. government.  Meanwhile, their CEO brought in over 29 million dollars in total compensation that year.

#9 It is estimated that U.S. companies have approximately 1.2 trillion dollars “trapped” overseas, because they cannot bring that money back into the country without being subjected to the 35 percent corporate tax rate.  But that money certainly could go a long way towards stimulating the stagnating U.S. economy.

#10 Sadly, the 1.2 trillion dollars that is “trapped” overseas is just the tip of the iceberg.  The largest corporations and the ultra-wealthy have turned tax avoidance into an art form.  The truth is that according to an article in Forbes magazine, there is somewhere between 15 and 20 trillion dollars in offshore bank accounts, brokerage accounts and hedge fund portfolios.  In fact, it has been estimated that a third of all the wealth in the world is held in “offshore” banks.

So is there any easy solution to all of this?

No, of course there isn’t.  At least not under the current system.

The following is a recent 60 Minutes video report about these problems.  It contains some really jaw-dropping stuff….

In light of all of these facts, is there anyone that is still willing to deny that our tax system is deeply broken?

The truth is that there is no fixing it.  There are thousands upon thousands of pages of loopholes in the federal tax code and regulations.  As you saw in the video above, even some of our representatives in Washington D.C. have lost all confidence that they can come up with new laws that would fix these problems.

If you still believe in the IRS and our federal tax code, I want you to do something.  I want you to go buy a copy of the federal tax code and the federal tax regulations and I want you to open them to any section and I want you to start reading them.

Very quickly you will find that the tax code and the tax regulations are an incomprehensible mess.  There are thousands upon thousands of ridiculous little rules about almost anything you can imagine, and yet many of our biggest corporations are still able to get away without paying a single red cent.

Does that sound like a good system to you?

At the same time, our incredibly high corporate tax rate is severely damaging our economy.  As the big multinational corporations flee in order to avoid paying taxes, they take good paying jobs with them.  So unless we all think it is a grand idea for the government to be providing food stamps to 44 million Americans each month we should start trying to figure out a way to start luring some of these jobs back into the country.

Again, our tax system is absolutely broken.  Raising taxes on corporations is not going to work.  Those corporations that are not currently paying any taxes would still not be paying any taxes, and it would just encourage more companies to leave the country.

Fixing the tax code and the tax regulations is next to impossible.  It is a convoluted morass that defies comprehension.  Congress simply is not going to “pass a law” that is going to instantly fix these problems.

What we need to do is to entirely start over with a completely new system.  Of course that is not going to happen any time soon, but once in a while I allow myself just a little bit of “wishful thinking” in these columns.

In any event, it is important for all of us to understand what current corporate tax policy is doing to this country.  The big corporations are paying barely any taxes and this is killing federal revenue, thus making our national debt problem worse.  Meanwhile, the corporate tax rate is so high that it is chasing hundreds of companies out of the United States, thus killing job growth.

The United States is not guaranteed to be prosperous forever.  The truth is that we are facing a vast array of economic problems and some really bad times for the economy are coming.

The problems we are facing now did not develop overnight and they are not going away any time soon.

Raising taxes is not going to fix our problems.  Lowering taxes is not going to fix our problems.  Our current tax system is not going to work no matter what the rates are.

We need to fundamentally rethink just about every aspect of our economic and financial systems, but the American people are not ready for that.  Most of them just want some smooth talking politician to promise them that a “tweak” here and a “tweak” there will fix everything.

Well, there is no easy fix when it comes to corporate tax policy and there are no easy fixes for the other economic problems that we are facing either.

So enjoy filling out your tax returns this year.  Perhaps it will bring you some joy to know that you are paying more taxes than some of the biggest corporations in the entire world.

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  • Gary

    “Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”

    Let me rephrase this in terms we can understand: GE avoids paying taxes by paying legal bribes to politicians, and by employing fraudulent accounting techniques to hide the money it makes in this country.

    We also need to TAX the RICH, HARD, in addition to these scumbag Benedict Arnold corporations, and SPREAD THE WEALTH!

  • http://www.povertylinejournal.blogspot.com/ the optimist

    It’s a disgrace. The whole system is rigged by the corporatocracy with “our” politicians in their pockets. It’s been like this for years and years. Corporate greed sickens me. Political corruption sickens me. American capitalism sickens me.

    Don’t the people who constantly screech about “the DEMOCRATS this, or the Republicans that” GET IT YET? It’s ALL of them, almost every last one in office who have let this happen and support its continuance.

    The CEOs blaming this on our higher taxes is disingenuous. The blackmail scheme mentioned in passing, to “bring back” the money at 5% shows them at their true colors.

    Hey as****es — stand up and do the RIGHT THING. Or you will be answering to the burgeoning neo-poor class and our children someday. We’re angry now, and it’s not going to be pretty.

  • http://www.grandmasdepressionmemories.com/ Leigh Kimmel

    the optimist: unfortunately, the people who run the megacorps no longer have the moral fiber to do the right thing. Instead, they regard the rules as a game, rather than a moral imperative, and will do whatever it takes to rig the outcome in their favor.

    And that corrosive attitude inevitably trickles down. We can talk all we want about the misbehavior of the underclass and lower middle class, but the real problem is the bad examples being set by the elite. As long as the people at the top behave badly and consistently get away with it, everyone else will take their cues accordingly.

  • Mr Carpenter

    Americans won’t stand up and fight in the streets in an attempt to stop this. We’re far too busy watching the (literally) mind-numbing television or watching the (literally) mind-destroying porn on the ‘net.

    This country is finished, it’s just taking time for the rot to go the rest of body from the head down. Like a dead fish.

  • A Student

    What the author fails to mention is that the reality is that NO CORPORATION actually pays a tax, they simply add the cost of any taxation on themselves into the price of the goods and services that they sell to human beings. All taxes are only paid by human beings – PERIOD.

    Until we start to understand this simple fact, we are hopelessly enslaved to the theft of our own labor to redistribute as this artificial creation we call “government” sees fit.

  • The III (3rd)

    It seems I read somewhere that there is a law on the books that corporations have to pay tax on their income but there is not law or statute that states the citizens of the United States are required to pay income tax.

    Lawlessness indeed!

    – The III

  • http://docericfl@aol.com Hannibal

    Welcome to the United States of America, Incorporated.

    Here is a quote from Lisa Guliani:

    “Congress is fully aware of this deception. You must be made aware that the members of Congress do NOT work for you and me. Rather, they work for the Corporation known as THE UNITED STATES. Is this really any surprise to you? This is why we can’t get them to do anything on our behalf or to answer to us — as in the case with the illegal income tax — among many other things. Contrary to popular belief, they are NOT our civil servants. They do NOT work for us. They are the servants of the corporate government and carry out its bidding. Period.”

    She further states:

    “I refer you to the UNITED STATES CODE (note the capitalization, indicating the corporation, not the Republic) Title 28 3002 (15) (A) (B) (C). It is stated unequivocally that the UNITED STATES is a corporation. Realize, too, that the corporation is not a separate and distinct entity from the government. It IS the government. YOUR government. This is extremely important. I refer to this as the “corporate empire of the UNITED STATES,” which operates under Roman Civil Law outside of the Constitution. How do you like being ruled by a cheesy, sleazy corporation?”

    So it makes sense why large corporations get away with not paying taxes.

    I have been following both your sites for the past 4 weeks now. Michael you are doing a great job. Thank you.

    • Admin

      Thank you Hannibal – I hope that you will join the ranks of our regular commenters. :)

  • Tallness

    Hey Gary! Let me guess…you don’t work!! Spread the wealth??? So the guy that works hard, goes into debt to be successful, spends 20 years getting an advance degree, should give it all away in the form of taxes?? You don;t get it! That’s why corporations are leaving and wealthy individuals are leaving. How about lower the tax rate which will keep companies here, more companies actually paying US taxes, more companies hiring Americans, more jobs, more people working, more people paying taxes, more revenue for the government!

    • Spellman789

      Lowering taxes can only go so far. Corporations are playing a game, so are the wealthy, with the tax laws. Everyone does it, some legally, others not so legally. Taxes are the price you pay for a civilized society. More jobs?? Earlier this decade the government announced a “tax holiday” for corporations to entice them to bring income back from overseas to the u.s. to create jobs, etc.. all the stuff you said. Well, no jobs, in fact they decreased, and all that money? went for bonuses to executives. So, lowering taxes? Just an excuse for the corporations and wealthy to get more rich at the expense of the government and american people. you are only kidding yourself believing, or spreading lies that lowering taxes will do all the things you said it would.

  • http://www.lewrockwell.com/ John and Dagny Galt

    A few notes. All businesses pass taxation on to their customers, if they want to continue to do business and HAVE customers. In reference to the idiots who think we should tax the rich…what a stupid idea. People gamble, play the lottery, and start businesses to BECOME rich, successful, and wealthy. If the Looterfest Mobocracy succeeds in persecuting and chasing-away all the gamblers, lottery players, and businesses, who will the looters loot then? Always remember, what you do to your friends, family, neighbors, and fellow human beings today…they get to do back to you tomorrow. How about them robot drone attacks on the men, women, and children of some-such-istans…is it no wonder that America cannot collapse quickly enough for the rest of the humans on the planet?

  • http://www.pathtoasia.com rhea

    Corporate tax is only a part of the tax system. In of itself does not present a full and complete picture of the tax burden. Not only corporate tax rates but all US tax rates should be brought in line with the OECD average. The real problem is also the lack of loyalty and character at these levels of corporate operations.

    We help Americans find jobs and prosperity in Asia. For details, visit http://www.pathtoasia.com/jobs/

  • http://endoftheamericandream.com/archives/10-facts-about-corporate-taxes-that-will-make-your-blood-boil Haallen

    I am a retired carpenter. I can remember a time, in America, on public works projects—construction projects funded by taxpayers—that all materials and supplies that came on that job had to be made in America. We had great prosperous times then.

    During the 80’s and 90’s, particularly after NAFTA and GATT, our right/left political geniuses outsourced American manufacturing jobs. Telling us we don’t need those crummy labor jobs. What we want are service jobs. Our benevolent government gave tax incentives to corporations to move production somewhere else.

    Where is the service job prosperity we were promised?

    Also, America experienced a rash of corporate raiders. These corporate raiders took control of financially sound companies, placed themselves in as the new corporate leaders. They immediately demanded that the employees give concessions in wages and benefits. Then, they meticulously sold off company assets and drove the company into debt. Of course the bottom line on their financial reports indicated a large immediate profit for several years. These guys were seen as financial geniuses and they gave themselves large salaries and big bonuses for a job well done. Then, before the business crashed, they moved-on and let the company self-destruct. And, the wall street shills blamed the greedy employees.

  • Rick

    Governments of the world should all get together and create a global fixed corporate tax scheme.

    That way no matter where they went, they ALL pay the same rate.

  • Isaac

    Corporations are slaves to their shareholders. They have to maximize profits, or people will invest elsewhere. The US needs to make itself attractive for corporations, both American and foreign.

    We can whine all we want about the rich, but if we were in their position we’d do the same thing. You wouldn’t stare in the face of a 1 million dollar profit, and comparable tax bills of 350,000 in the US and 125,000 in Ireland, and say, “well gosh, I think I’ll pay the American taxes”

  • RockyRacoon

    I am against these tax cuts that the Canadian government is giving to the corporatocracy. They need to pay their fair share of what it takes to make a society work. Roads, Schools, hospitals, public utilities and the cost of raising the next generation of workers. I would not allow them to sell one product in the country if this is how they want to operate. Patriotism it seems is a sucker’s game used con our youth to serve as cannon fodder abroad or prisoners at home-all in the service of capitalism. Competition is NOT what has allowed us to evolve as a species-adaptation and cooperation are the cornerstones of civilization. It is about time we stopped listening to this garbage about the “free enterprise” system. It has nothing to do with democracy or freedom and everything to do with wage slavery crimes against humanity and the outright destruction of mother earth. The lies about our system of production have been repeated so often for so long that they have become true-not materially but ideologically and have in turn become a material force in that it keeps people bound up into a system that is diametrically opposed to their own interests. Many other countries in the world have experienced the ugly underbelly of capitalism that has has come to hit home in American-it is a sy stem that has long overstayed its welcome in the history of humankind-if this sounds like rhetoric of old well so be it. At 56 years of age I have witnessed the complete destruction of our values reduced our citizens to mothing more than a commodity whose only worth is what their labour power can bring them in the marketplace. Time after time we describe the other as less than-a good look in the mirror will tell us that the other is exactly what we have become-less than human indeed barbaric. Socialism is the only system that can recind this history as it is the only system that takes capitalism head on. From South America to Norway people know better-you will learn the easy way or the hard way but Americans will learn and that time is fast approaching. The sooner the better.
    Yours,
    RR

  • calvin coolage

    the biggest reason our tax code ie; income tax is broken is that it creatyes class warfare in that those who want vote one way and those who give vote another way and as of lately those who want are winning thus creating a tyranny of the majority.