It used to be that the only sure things in life were death and taxes. Not so anymore. According to a just released study by the GAO, two out of every three US corporations paid no federal income taxes from 1996 to 2005.
In fact, in 2005 one in four large corporations paid no taxes on revenue of 1.1 trillion $$$. At a basic corporate tax rate of 35 percent, all the corporations covered in the study (in theory) owed upwards of 875 billion $$$ in federal income tax.
Wow. That's a hell of a lot of pocket change.
Why did this happen? Well according to Senator Carl Levin (who commissioned the research), "Too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share."
The senator is referring to something called transfer pricing. This involves corporations charging their overseas subsidiaries lower prices for goods and services, a common move that also lowers the tax bill. Something our IRS doesn't take kindly to.
As a business owner, I can appreciate just how much of a burden taxes are. We're taxed at every possible level and sometimes twice (NYC and New Jersey) and it often feels like the government never stops reaching into our wallets month in and month out. It weighs on our mind when we invest in the business, pay costs and grow.
This may seem strange (coming from a fiscal Republican,) but I also strongly believe that companies need to pay their fare share. There is just no excuse for allowing these loop holes to continue. In the case of public companies, they only serve to create false disclosures on accurate profit levels. More importantly, think about how 875 billion $$$ could be used to pump up important infrastructure, environmental, educational and other vital consumer and business wants during these trying recessionary times.
Let's kill the loopholes that allow for this corporate cheating to occur. I'm no fan of taxes, but an equitable system remains the only way to continue the American way of life. One that that still represents the gold standard across the globe.