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It appears that a few well-off Americans paying unusually low taxes to Uncle Sam are not alone; they are in the good company of corporate America. This is the shocking disclosure of a corporate study that was prepared by the Citizens for Tax Justice.

As anticipated, some companies were quick to cry foul disputing the findings while stating that it had undervalued their tax payments by omitting differed taxes that they may well pay in the future.

A comprehensive study found out that 280 of the biggest publicly traded American companies faced federal income tax bills amounting to 18.5 percent of their profits in the last three years. This is a little more than half of the 35 percent official corporate rate. It is also lower than what most of their competitors in industrialized nations pay.

The companies' regulatory filings, from which the data for the study was collected, may differ from their corporate tax returns. This is because a company may claim an overall tax benefit and may pay some cash taxes as it accumulates credits that can be traded in later years. Most companies however, do not make public their tax returns. This makes the corporate regulatory filing the best publicly accessible estimates of the strategies they apply to have their tax bill cut.

For the whole three year period, the study concluded that 30 companies had no federal tax obligations while 70 out of the 280 corporations owing less than 10 percent of profits in Federal income taxes. Some companies that evade taxes like the plague might have benefited from those who do, courtesy of loopholes in the current tax system. According to the author of the study Robert S. Mclntyre, the public and the tax compliance companies should pile pressure on the tax-evading companies to also pay their fair share.

Ironically, the report is being made public when companies are seeking to have their tax rate cut. They claim the prevailing system puts American companies at a disadvantage with competitors, a situation that compels them to move jobs and invest abroad. The Congressional committee assigned the duty of looking into their grievances is already looking into their proposals of adjusting the corporate structure, overhauling the tax system and perhaps bringing the corporate taxes down.

Boeing and Ryder are among the companies that the study said escaped liability for all the three years. In their reaction to the report, Art A. Garcia, Boeing's chief financial officer, said that the company had reaped the benefits of extra depreciation aimed at accelerating the economy. The officials further claimed that they, like any other company, had paid their dues to Uncle Sam. Also, they had taken advantage of tax breaks intended to encourage hiring. Only this year, 9,000 American workers are said to have landed jobs in the company; this is according to the company spokesman, Chaz Bickers

Another company on the notorious list was General Electric, whose spokesman, Kenneth Juarez termed the report as "inaccurate and distorted." General Electric came under serious scrutiny early this year after the New York Times reported that it had recorded a $5.1 billion in American profits in 2010 but claimed a federal income tax benefit of $3.2 billion in its regulatory filing.

Wells Fargo Bank also appeared in the report as having recorded the largest reductions in taxes. It reportedly received a tax benefit of $651 million and a total of $49 billion in profits in 2008 through 2010.

The Internal Revenue Service noted that American corporations, unlike previous decades, pay smaller shares of taxes. In 2010, they paid a total of $191 billion in federal income taxes, equivalent to 1.3% of the nation's GDP. This, compared to 1950, indicates a 6% drop.

Despite the fall in corporate tax rates, business activists are still demanding for further reduction of the top rate to encourage hiring and investment. The head of Americans for Tax Reform Grover Norguist says that the U.S. system is not competitive because it taxes income earned around the world instead of just in the country.

However, two thirds of the American companies that make massive profits overseas paid more taxes to the overseas governments than they do in the United States. This is as per the Citizens for Tax Justice Study findings.

Rob L Daniel and partners of Limon Whitaker & Morgan, for years have helped businesses and individuals Nationwide, with their delinquent IRS & State tax problems. The firm is based in Los Angeles, California USA. http://www.limonwhitaker.com / Tel:888.321.6188

By Rob L Daniel
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