Last year on Tax Day we shared some figures from the recently published Big Bank Tax Drain report on the LittleSis blog, showing that six of the largest financial institutions in the U.S. – Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo – collectively avoided $13 billion in tax payments in 2009 and 2010, “shortly after US taxpayers bailed them out to the tune of hundreds of billions. That’s enough to pay for all the teacher jobs lost in the course of the crisis – twice.”
This April, the researchers at Citizens for Tax Justice (CTJ) have issued an update to their major report on tax avoidance by 280 of the country’s largest corporations, published last November (“Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010”). We’re disappointed but hardly surprised to learn from CTJ that of the 30 Fortune 500 companies who paid a less-than-zero federal income tax rate from 2008 to 2010 (a group that includes behemoths such as Boeing, GE, Verizon, and the aforementioned Wells Fargo), all but four maintained their net-refund tax status through 2011.
Taken by itself, this finding alone is enough to outrage those of us who do pay taxes, but as CTJ’s authors note, it also has serious implications for the state of our economy as a whole: “The Treasury Department reports that corporate taxes fell to only 1.2 percent of our gross domestic product over the past three fiscal years. That’s lower than at any time since the 1940s except for one single year during President Reagan’s first term. By comparison, corporate taxes averaged almost 4 percent of our GDP during the 1960s.”
Meanwhile, in a recent New York Daily News column, Joanna Molloy talks to some of the individual American workers who collectively pitch in to cover the yawning gap in public revenues created by large corporations’ tax-dodging. Patrick Welsh, a retiree, pays a 24% income tax rate while his former employer Verizon (tax rate 2008-2011: -3.8%) “hasn’t given a cost of living increase to retirees in 20 years and is now asking them to pay thousands in health insurance premiums.” Stories like these are especially galling given what we know about Verizon’s business practices – not only their negative federal income tax rate, but also their spiraling executive compensation ($70 million to their top six officers in 2011, up over 50% from the previous year) and plundering of retirement benefits (this 2006 “restructuring” press release preceded the elimination of defined pensions for 50,000 management-level Verizon employees, worth up to $5 billion; see Ellen E. Schultz’s Retirement Heist (2011) for the gory details).
Verizon’s record as a poor corporate citizen is fresh in our minds after we worked with 99% New York to produce this info sheet on the company, which was brandished at actions across New York State in February. With the disparity between the tax burden on most Americans and those few able to take advantage of tax loopholes likely to remain a prominent political issue in 2012, we hope that the work of organizations like CTJ reaches a wider audience and hastens the introduction of more equitable tax laws.