Skip to main content

Common Dreams. Journalism funded by people, not corporations.

There has never been—and never will be—an advertisement on our site except for this one: without readers like you supporting our work, we wouldn't exist.

No corporate influence. No pay-wall. Independent news and opinion 365 days a year that is freely available to all and funded by those who support our mission: To inform. To inspire. To ignite change for the common good.

Our mission is clear. Our model is simple. If you can, please support our Fall Campaign today.

Support Our Work -- No corporate influence. No pay-wall. Independent news funded by those who support our mission: To inform. To inspire. To ignite change for the common good. Please support our Fall Campaign today.

 Exxon has over half of its natural gas facilities, half of its developed acreage, the great majority of its productive and development wells, and half of its retail sites in the U.S. but declared $5.8 billion in U.S. losses along with $13.8 billion in foreign profits in 2016. Exxon CLAIMED A CREDIT on its U.S. income tax.

"Exxon has over half of its natural gas facilities, half of its developed acreage, the great majority of its productive and development wells, and half of its retail sites in the U.S. but declared $5.8 billion in U.S. losses along with $13.8 billion in foreign profits in 2016. Exxon CLAIMED A CREDIT on its U.S. income tax." (Photo: Mike Mozart/flickr/cc)

Three Insidious Ways 'Overtaxed' Corporations Are Cheating America

Big companies are deceiving us and the media won't report it.

Paul Buchheit

Corporate cheating goes well beyond federal tax reporting, as big companies have used various forms of deception to keep taking from America, especially with a complicit corporate media unwilling to report the facts about their behavior.

1. Give Us Your Technology, Infrastructure, Security, Patent Law....But Sorry, Our Profits Were Made in Another Country.

Microsoft: "Rediscovering Their Soul" while Skipping Out on Their Taxes

Microsoft CEO Satya Nadella writes about the "Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone," and the company's commitment to "humans and the unique quality we call empathy." But the empathy apparently doesn't apply to the Americans who rely on tax dollars to support basic needs. Microsoft made over half its 2017 revenue in the U.S., and it has 57 percent of its long-lived assets in our country. Yet for 2016 it claimed a LOSS IN THE U.S. and a $20 billion profit in other countries. Microsoft goes on to tell its shareholders: "As of June 30, 2017, $127.9 billion was held by our foreign subsidiaries and would be subject to material repatriation tax effects."

Few other companies have benefited as much as Microsoft from 75 years of technological research and development in the United States. But the company refuses to own up to its tax responsibility, and to its social responsibility.

Caterpillar: Blaming Everyone Else while Skipping Out on Their Taxes

Former Caterpillar CEO Doug Oberhelman said, "Legislators in Illinois have created an environment that is unfriendly to business and investment." But friendly enough to tolerate Caterpillar's blatant U.S. tax avoidance. The heavy equipment company has 56 percent of its property, plant, and equipment in the U.S., along with over 40 percent of its sales and 43 percent of its employees. But in 2016 it claimed a loss of over $2 billion in the U.S. and a profit of over $2 billion overseas. It took tax credits at both the federal and state levels.

Despite being under investigation by the IRS for overseas tax fraud, Caterpillar's annual report includes a "Worldwide Code of Conduct," which boasts about the company's "high standard for honesty and ethical behavior by every employee, including the principal executive officer, principal financial officer, controller and principal accounting officer." Apparently the company's tax department is exempt from the Code.

Other Notable Profit Shifters

Exxon has over half of its natural gas facilities, half of its developed acreage, the great majority of its productive and development wells, and half of its retail sites in the U.S. but declared $5.8 billion in U.S. losses along with $13.8 billion in foreign profits in 2016. Exxon CLAIMED A CREDIT on its U.S. income tax.

Pfizer CEO Ian Read complained that U.S. taxes had his company fighting "with one hand tied behind our back." The other hand must be fudging the books. Pfizer had half of its sales in the U.S. in 2016, yet claimed an $8.5 billion LOSS IN THE U.S. along with nearly $17 billion in foreign profits. Pfizer paid just 4 percent of its total income on U.S. taxes in 2016, and was one of the nine pharmaceutical companies among the top 30 Fortune 500 firms in offshore tax hoarding.

Dow Chemical had 63 percent of its assets and 35 percent of its sales in the U.S. in 2016, but declared almost 90 percent of its income in other countries. Abbott reported 40 percent of its revenues in the U.S., but just 7 percent of its profits. Amgen reported 78 percent of its revenues in the U.S., but just 38 percent of its profits.

The deceit gets even worse with another form of "profit shifting," by which understated U.S. profits may be understated even more. Some of the profits reported to shareholders as US-earned may be reported to the IRS as foreign-earned. The result is that profits allegedly earned in foreign countries are held indefinitely overseas, with all taxes deferred. S&P 500 companies -- including Apple, Microsoft, and Pfizer -- have stashed away $2.3 trillion, which represents a loss to America of over $800 billion in tax revenue. Apple itself has moved about two-thirds of its worldwide profits to Ireland, waiting, perhaps, for a minimal-tax repatriation deal.

Again the deceit worsens, as tax policy experts note that this tax-deferred hoard of money can be put to use in the U.S. even as it's being withheld from the U.S., through the purchase of Treasury bonds or stock in other companies.

2. Pass Around the State Tax Deals....You Take This Governor, I'll Take That One

Amazon is the most recent example of this phenomenon, as Chicago, Minneapolis, Nashville, Cincinnati, Indianapolis and a slew of other contenders are tripping over each other to give tax breaks to the company, to subsidize a warehouse that they would need to build anyway.

Big companies are playing one state government against another, looking for the best tax deal while the rest of us have to make up the lost tax revenue. The Institute on Taxation and Economic Policy (ITEP) and Good Jobs First have done comprehensive studies of the farcical practices.

The worst offenders are the richest corporations, who entice dazzled state officials with promises of jobs. Google, Microsoft, Amazon, Apple and Facebook are together making well over $100 billion a year in pre-tax profits, yet demanded state subsidies to build new data centers. Apple's getting over $200 million from Iowa; Amazon took tens of millions from Illinois and Kentucky; iPhone-maker Foxconn negotiated for tax credits from Wisconsin that could amount to $500,000 per job.

The very worst may be Boeing, with more state subsidies than any other company, and which took billions from the state of Washington and then moved to Illinois, where it has become the state's biggest tax avoider.

Then there's GE in Massachusetts; Exxon in Texas; Disney's luxury hotel in California; Chiquita playing off Ohio and North Carolina, and Panasonic and Pearson doing the same in New Jersey; Aetna getting $34 million from New York for just 250 jobs; economic incentives from Indiana to keep Carrier from moving to Mexico; the state of Michigan offering tax breaks to ANYONE who brings in jobs.

3. To Hell with American Jobs... Just Make Our Stocks Go Up

Forbes calls stock buybacks "fool's gold," because they temporarily make a business look good by boosting stock prices, while at the same time resulting in cutbacks in hiring and R&D.

Buybacks were once illegal. But from 2003 to 2012 S&P companies spent over 90 percent of their profits on buybacks and dividends. In 2016, 119 companies in the S&P 500 spent MORE ON BUYBACKS THAN THEY GENERATED IN EARNINGS. In the future, the threat of corporate tax cuts is likely to accelerate the buyback frenzy. A Goldman Sachs analyst predicted that S&P 500 companies will have spent $780 billion on buybacks by the end of 2017.

All the big companies -- technology, pharmaceutical, oil, chemical, agriculture, finance -- owe their great profit-making success not so much to individual, self-made, "start with nothing" innovation and entrepreneurship; but rather to the taxpayer-funded research and development that built the foundations for these industries while the middle class trusted in the American work ethic. Now the middle-income jobs are going away, leaving underpaid service-oriented jobs. The tax money withheld by the big corporations is desperately needed to restore living-wage opportunities to millions of workers. But these companies refuse to pay for all the benefits they've happily taken over the years.


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Paul Buchheit

Paul Buchheit

Paul Buchheit is an advocate for social and economic justice, and the author of numerous papers on economic inequality and cognitive science. He was recently named one of 300 Living Peace and Justice Leaders and Models. He is the author of "American Wars: Illusions and Realities" (2008) and "Disposable Americans: Extreme Capitalism and the Case for a Guaranteed Income" (2017). Contact email: paul (at) youdeservefacts.org.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Simply Don't Exist.

'Outrageous and Shameful': Dems May Cut Paid Leave Due to Manchin's Opposition

Decrying the plan, advocacy groups vowed that "the American people are not going to allow that essential human need to be ignored and negotiated away behind closed doors."

Jessica Corbett ·


Open Letter Warns Trump's 'Big Lie' GOP Poses Existential Threat to Democracy

"Now is the time for leaders in all walks of life—for citizens of all political backgrounds and persuasions—to come to the aid of the republic."

Brett Wilkins ·


Ahead of Historic House Hearing, Fresh Big Oil Misinformation Campaign Exposed

"It's always helpful to remember that big fossil fuel companies (besides being overwhelmingly responsible for carbon pollution) are also skeevy disinformation hucksters."

Jessica Corbett ·


'Very Welcome' Progress as Iran Agrees to Restart Talks on Nuclear Deal Sabotaged by Trump

One peace advocate urged all sides to reconvene negotiations "as soon as possible and with renewed urgency" to avert "disastrous" consequences for Iran and the world.

Brett Wilkins ·


House Progressives: 'When We Said These Two Bills Go Together, We Meant It'

"Moving the infrastructure bill forward without the popular Build Back Better Act risks leaving behind working people, families, and our communities."

Andrea Germanos ·

Support our work.

We are independent, non-profit, advertising-free and 100% reader supported.

Subscribe to our newsletter.

Quality journalism. Progressive values.
Direct to your inbox.

Subscribe to our Newsletter.


Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit | Privacy Policy
Common Dreams Logo