US Corporations Evading Federal Taxes
The Sanders memo detailed the 10 worst evaders of U.S. income tax in the country, of which Exxon Mobil Corp. (XOM) placed first. The oil giant made $19 billion in profits in 2009 while paying zero income tax to the federal government. The company received a $156 million tax rebate from the IRS at the end of the year, according to its SEC filings.
Around that same time, The New York Times released a report that focused on General Electric Co. (GE). The report said that GE made more than $14 billion last year, but still paid no taxes. Like XOM, GE received a $3.2 billion tax benefit from the IRS.
According to The Times, GE took advantage of existing tax loopholes, hiding its profits offshore in countries that had a more favorable corporate tax rate than the U.S. The U.S. rate is 35 percent, which is one of the largest in the world.
While Congress has failed to close the loopholes allowing these companies to pay little to no taxes, it is also jockeying for position to frame the debate in its favor.
Sanders has not submitted legislation addressing existing loopholes in the tax code, but he has called on Congress to eliminate tax breaks for large corporations. Like other Democrats, Sanders has said that American families cannot be the only ones responsible for budgetary woes.
GOP Rep. Rob Woodall of Georgia defended XOM at a telephone town hall meeting. The meeting, which was held March 22, consisted of voters calling in to interact with Woodall. When a constituent voiced concern about XOM, Woodall defended the corporation.
“We have to attract new businesses to our shores. The way to do that is with the lowest corporate tax rate we can get – to make sure folks want to come here,” said Woodall.
Fox News pundit Bill O’Reilly attempted to connect President Barack Obama to GE boss Jeffrey Immelt, who supported Obama in 2008. O’Reilly did not, however, factor in the rest of the companies on Sanders’ list, or that this legal tax evasion has been going on for years.
The practice dates back to the late 1990s, when 66 percent of corporations paid no income taxes to the U.S. government from 1998-2005, according to the Government Accountability Office.
Companies such as GE are spending millions on lobbying efforts to avoid such taxes. GE also received millions in tax exemptions and rebates because of its company-wide Going Green initiative.
Obama has said he would like to rework the corporate tax structure, but with the budget fight still ongoing and foreign policy starting to take center stage, it is unclear whether or not Sanders’ list will cause any legislative changes.
To date, neither the House nor Senate has moved to address the issue.