Companies with more than $10 million in assets paid an average rate of 12.6 percent of their global profits in 2010, according to the latest data available, says a new study by the Government Accountability Office, a nonpartisan congressional watchdog. That compares to the statutory corporate tax rate of 35 percent.
"When some U.S. corporations use unjustifiable loopholes and offshore gimmicks to avoid paying Uncle Sam, their tax burden is shifted onto hardworking American families and small business," Sen. Carl Levin (D-Mich.), who commissioned the study, said in a statement, according to The Hill. "Today's GAO report quantifies just how much of the corporate tax burden has been shifted onto other taxpayers: America's large, profitable corporations are now paying a lower tax rate than our teachers and firefighters."
The study, which the GAO conducted at the request of Sens. Levin and Tom Coburn (R-Okla.), comes at a time when U.S. companies are complaining that their tax rate is among the highest in the world and should be cut to help them stay competitive.
The GAO study is consistent with a slew of others, mainly done by reform-minded groups, that have shown actual corporate tax rates are consistently well below the statutory rate. Another recent GAO report found that corporate tax avoidance costs the U.S. government $180 billion per year. Many companies not only do not pay taxes, but they actually get money back from the government. An earlier GAO study found that 55 percent of big U.S. companies had avoided paying taxes altogether in at least one year between 1998 and 2005.
Companies have lots of legal loopholes that help them avoid paying taxes, including the ability to stash foreign profits offshore indefinitely. A recent study by the reform-advocacy group Citizens for Tax Justice found that at least 18 big U.S. companies, including Apple, Microsoft and Nike, are avoiding paying a combined $92 billion in taxes by using offshore tax shelters.
What, therefore, is to be done? The answer is obvious. Let's complain about unionized teachers and fire fighters making too much money. Yours sincerely, Freedom Fighting Bill
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