That General Electric managed to essentially pay no taxes in 2010 (despite $5.1 billion in profits) is old news—so it is not surprising, but is incredibly disheartening, to learn that GE is far from alone in finding ways around U.S. tax law. A study out today from the group Citizens for Tax Justice shows that between 2008 and 2010, 30 companies managed to pay no federal income tax, despite earning a combined $160.3 billion in profits. Good thing House Ways and Means committee chairman Dave Camp (R-MI) wants to rewrite the tax code so the top corporate tax rate is 25 percent (down from 35), right?
According to the report [PDF]:
A quarter of the 280 companies studied owed less than 10 percent of their profits in federal income taxes.
40 percent paid an effective tax rate of less than 17.5 percent after claiming deductions and credits.
Another quarter of the companies less skilled in the accounting dark arts paid an effective tax rate exceeding 30 percent.
In addition to those 30 who didn't pay a dime the whole time, 78 of the companies enjoyed at least one year in which their federal income tax was zero.
Another interesting fact—and a blow to pundits who say that we need to lower the corporate tax to better attract more businesses—according to the report those U.S. corporations with "significant foreign profits paid tax rates to foreign countries that were almost a third higher than they paid to the IRS on their domestic profits."
The biggest winner in the corporate tax game appears to be Wells Fargo, which got nearly $18 billion in tax breaks over the last three years, while Pepco Holdings had the lowest effective tax rate (negative 57.6 percent) over the same period. Wells Fargo says that its savings came from write-offs for its 2008 purchase of Wachovia. Other companies who pulled some interesting tricks include FedEx, whose effective tax rate of 0.9 percent is remarkable compared to UPS's 24.1 percent rate, and Amazon, which paid far less than most other retailers with an effective rate of 7.9 percent.
In 2010, corporations paid a total of $191 billion in federal income taxes, representing about 1.3 percent of the nation's gross domestic product. In the 1950s that number was 6 percent. Corporation: they're just like us—only with much, much, much better accountants.