|While some American taxpayers have been alarmed that the USA's record profit oil companies have been given an $8 billion dollar tax break by the government, a study released this week using government figures paints a disturbing picture about many of the USA's corporations.|
The Congressional Quarterly reported this week that most corporations, including the vast majority of foreign companies doing business in the United States, pay no income taxes.
The report was issued by the Government Accountability Office.
The Quarterly says during the eight-year period covered by the report, 72 percent of foreign-owned corporations went at least one year without owing taxes, and the same was true for 55 percent of domestic corporations.
It said small companies were much more likely to pay no taxes than larger companies.
More than 3,500 large domestic corporations — with more than $250 million in assets or $50 million in gross receipts — did not pay taxes in 2005.
The report said about 80 percent of the companies studied paid no taxes because they didn't generate any profit after expenses.
Money-losing companies can legitimately owe no tax, although they frequently generate high incomes for their executives.
"It's shameful that so many corporations make big profits and pay nothing to support our country," said Byron L. Dorgan , D-N.D., who requested the report along with Carl Levin , D-Mich.
"The tax system that allows this wholesale tax avoidance is an embarrassment and unfair to hardworking Americans who pay their fair share of taxes. We need to plug these tax loopholes and put these corporations back on the tax rolls," said Dorgan.
The report covered the period from 1998 through 2005.
During that time, corporate income taxes as a share of gross domestic product dipped, from 2.2 percent in 1998 to 1.2 percent in 2003, the lowest share since 1983.
The GAO report also found that foreign-owned corporations were somewhat more likely to report no income than domestic corporations.
Companies looking for lower-taxed jurisdictions often take profits out of the United States.
Many tax experts and lawmakers from both parties, including Ways and Means Chairman Charles B. Rangel , D-N.Y., and presidential candidate Sen. John McCain , R-Ariz., have called for lowering the corporate tax rate.
Finance Chairman Max Baucus, D-Montana, said, "I'm committed to finding ways to improve compliance and reduce taxpayer burden so that we begin to bridge the tax gap, which accounts for $345 billion in legally owed but uncollected federal revenues each year."
He said the GAO report "shows yet again the need for full-fledged [tax] reform."