Don't Any of You Corporations Pay Your Taxes?
It gets tiring to hear the complaints about the allegedly excessive corporate federal tax burden in the U.S., and the need for CEOs to move their offices to more tax-friendly countries. It's just as bad within the states, where budget-strapped governments are forced to make tax concessions to keep big companies from slinking across the border to save a few million dollars. My home state of Illinois is a present-day example. Facing one of the highest budget deficits in the nation, and barely able to keep vital public services functioning, we were forced to give a tax break of $85 million per year to the Chicago Mercantile Exchange (CME), whose profit margin over the past three years is higher than any of the top 100 companies in the nation.
A tax break to the most profitable U.S. company. Absurd. Especially since CME has prospered for over 100 years with the help of Chicago's people, location, and infrastructure. But we don't hear the facts in the mainstream media. Instead, we're reminded of the importance of retaining our job-producing big firms, even though they haven't been producing many jobs.
It's clear that our largest corporations have been avoiding federal taxes. A study by Pay Up Now revealed that the top 100 U.S. corporations paid 12.2% from 2008 to 2010, barely a third of the maximum rate.
Now comes a new study by Citizens for Tax Justice that shows tax avoidance at the state level. The CTJ study, which evaluated 265 large companies, determined that an average of 3% was paid in state taxes, less than half the average state tax rate of 6.2%. The ten states with 10 or more companies in the study all collected between 2.5% and 3.55%: Ohio, Texas, New Jersey, Pennsylvania, Illinois, Minnesota, Virginia, California, North Carolina, and New York. Pay Up Now provides the detail for all states represented by four or more companies.
CTJ notes that "these 265 companies avoided a total of $42.7 billion in state corporate income taxes over the three years."
To be fair, some major corporations are paying their responsible share of taxes, such as those, in the case of federal taxes, that are part of the medical and pharmacy service industries. Ironically, one of the responsible state-tax-paying corporations is CME. Although maybe there's no irony involved here. Just good old business sense. If the other guy isn't paying, then why should I?
This clamor to avoid taxes is happening at a time when corporations are enjoying record profits. And at a time when corporate income tax as a share of GDP is just ONE-THIRD of the share of GDP in the 1960s.
You corporations have benefited from a half-century of public research, infrastructure, and technological innovation. So pay for it.