Did You Know? Most Corporations Pay NO Federal Income Tax
A little fun fact for you on Tax Day.
The fact that most corporations in the US don't pay federal income tax is one of those things that all of us have heard, but we're not sure just how true it is. It's completely true, and now we have the exact figures from the pro-business Wall Street Journal and the famously neutral General Accounting office (an investigative arm of Congress now known as the Government Accountability Office).
The GAO examined millions of tax returns from 1996 through 2000, the economic boom years. They found that 61 percent of US-based corporations paid no income tax. For foreign-controlled corporations that operate in the US, 71 percent don't pay.
When they looked strictly at "large" corporations - "those with assets of at least $250 million or gross receipts of at least $50 million in constant 2000 dollars" - the percentages are switched, with 71 percent of large US corporations and 61 percent of large foreign-controlled businesses not contributing to the country's coffers.
To make it even more sickening, most of the corporations that actually do owe taxes pay a rate less that 5 percent, even though the base rate for corporate entities is 35 percent. (Only 0.8 percent of US corporations and 0.1 percent of non-US corporations paid 30 percent or more, the suckers.)
So when you add the corporations that pay no taxes with those that pay tiny taxes, 94 percent of US-controlled companies and 89 percent of foreign-controlled companies paid zero to 4 percent in taxes.
To make sure these numbers weren't due to small businesses that broke even or went belly-up, the bean counters looked at the stats for large corporations only. In this category, 82 percent of US-controlled companies and 76 percent of foreign-controlled companies paid less that 5 percent in taxes.
This failure to pony up their fair share is killing the government's bottom line. The WSJ reports: Corporate tax receipts have shrunk markedly as a share of overall federal revenue in recent years, and were particularly depressed when the economy soured. By 2003, they had fallen to just 7.4% of overall federal receipts, the lowest rate since 1983, and the second-lowest rate since 1934, federal budget officials say.
The following is an excerpt from the book 100 Things You're Not Supposed to Know, edited by Russ Kick.
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