in us economy, not much certain except debt and tax breaks
A report released last week by the Government Accountability Office reveals that two-thirds of US corporations claimed zero federal income tax liability between 1998 and 2005. The report, which was compiled at the request of Democratic Senators Carl Levin of Michigan and Byron Dorgan of North Dakota, also finds that 68 percent of foreign-controlled corporations with US operations paid no taxes over the same period. The GAO concluded that together the companies reported trillions in US revenues during the years studied.
“It’s shameful that so many corporations make big profits and pay nothing to support our country,” said Dorgan, who called the report “a shocking indictment of the current tax system.” Levin highlighted the sophisticated accounting practices that enable companies to legally reduce their tax liabilities through the transfer of funds, saying, “corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States.” The report comes in the wake of the Bush administration announcement that the US budget deficit for next year will reach a record $486 billion.
In 2005, the most recent year for which figures are available, 66.7 percent of US corporations, more than 1.2 million companies, paid no federal income tax. Additionally, more than 38,000 foreign corporations also avoided US corporate tax in the same year. The companies avoiding income tax reported a combined $2.5 trillion in sales. The GAO also found that 72 percent of foreign corporations and 57 percent of US companies paid zero income taxes for at least one year between 1998 and 2005. More than 42 percent of US corporations and half of all foreign companies avoided all taxes for two or more years during that period.
The GAO report did not name specific companies. Corporations typically claim zero liability when they report an operating loss, or by the application of tax credits or other government incentives, which may include tax deferments. Critics of US corporate tax policy accuse large corporations of aggressively avoiding tax liability through elaborate transfer pricing structures that shift profits and losses to the most advantageous tax jurisdictions.
cross posted at
redstateupdate.net
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