An executive from the multinational corporation Corning, Inc. testified before the House Ways and Means Committee last week and told them that corporate taxes are just too high in this country and it’s hurting American companies, including them:
American manufacturers are at a distinct disadvantage to competitors headquartered in other countries. Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers, and virtually all operate under territorial systems which encourage investment both abroad and at home.
But as ThinkProgress points out, this company hasn’t actually paid any federal taxes in years:
Over a four years period from 2008 to 2011, Corning Inc. was one of 26 companies that managed to avoid paying any American income taxes, even though it earned nearly $3 billion during that time. In fact, according to Citizens For Tax Justice, the company received a $4 million refund from 2008 to 2010. ..
Ford told the committee that Corning paid an effective tax rate of 36 percent in 2011, but as CTJ notes, she is counting taxes on profits earned overseas that haven’t yet been paid and won’t be unless the company decides to bring the money back to the United States. Corning’s actual tax rate in 2011, according to CTJ’s analysis, was actually negative 0.2 percent.
Maybe we should just all pony up and give them a few billion a year to make them feel better.
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Bronze Dog
July 25, 2012 at 11:12 am (UTC -4) Link to this comment
Negative tax rate and apparently begging to make it even more negative. I wonder if we could get some wingnuts to side against these companies if we called it “corporate welfare.”
Zinc Avenger (Sarcasm Tags 3.0 Compliant)
July 25, 2012 at 11:17 am (UTC -4) Link to this comment
@Bronze Dog, #1:
Why do you hate
Jesuscapitalism?augustpamplona
July 25, 2012 at 11:24 am (UTC -4) Link to this comment
Bronze Dog wrote:
It makes sense. If it is an unqualified truth that the lower taxes are the better it is for the economy then subsidizing everyone should be the best of all.
matty1
July 25, 2012 at 11:36 am (UTC -4) Link to this comment
I could almost go for that, with a few tweaks
http://en.wikipedia.org/wiki/Negative_income_tax
davidct
July 25, 2012 at 11:41 am (UTC -4) Link to this comment
There is some truth to the claim if one just looks at the tax rates on the books which are higher than in many competing countries. The problem is that the rates are far from the whole story. There is a complicated system of exemptions, subsidies and deductions that can best be exploited by those companies who can afford the best tax lawyers. The effective tax burden falls on medium to small companies while GE which had profits of about 10-11 billion last year paid almost no federal tax. Reducing the base tax rate may help smaller companies but it would result in massive subsidies to bigger ones. As usual things are not what they seem when talking tax rates which are not actually being paid equally.
TxSkeptic
July 25, 2012 at 12:03 pm (UTC -4) Link to this comment
My small business didn’t pay any fed taxes last year either* …
but that was because there was no profit to pay taxes on, due to the crappy economy brought to us by Wall St, the big banks & the multinationals. I would dearly love to have a big fed tax bill this year – that would mean business is good.
* not counting the state & federal payroll taxes, sales tax and property tax, all of which care not if you are actually making a profit.
Trebuchet
July 25, 2012 at 12:16 pm (UTC -4) Link to this comment
@Zinc Avenger:
Same thing, you ninny. Ask any teapartier.
baal
July 25, 2012 at 12:38 pm (UTC -4) Link to this comment
Um, not really. Thinkprogress is fairly lefty but you can find very similar arguments and data on a google for “effective tax rates”. As several have already pointed out – the effective tax rates are not consistent across company size. The largest companies with the most income and profit are usually the ones best able to take advantage of tax breaks (upto the effectively negative taxation mentioned in OP).
Michael Heath
July 25, 2012 at 12:43 pm (UTC -4) Link to this comment
There’s no defense for this disingenuous and blatantly false argument. However, a point needs to be made. Even companies who aren’t currently paying taxes consider an estimated effective taxation rate when making capital investment decisions, along with other decisions which impact costs and where jobs are located.
So from a finance perspective, when making decisions companies are generally inclined to use something greater than zero.
In addition, it’s idiotic – no, extremely idiotic, to merely compare effective rates between countries to determine whether this country’s is onerous or not. Not as idiotic as comparing stated rates, but still – extremely idiotic.
That’s because decisions which effect both capital and labor are not made based on effective tax rates alone, but a whole host of costs and other factors. For the U.S. to be globally competitive we need to exploit our strengths (we’re a rich country) and mitigate our weaknesses (our no-skill labor costs are high, employers competing globally are predominately charged with covering rising healthcare costs for their employees). This would argue for higher taxes on individuals, and moving towards a government single-payer plan for healthcare, and always optimize effective rates on business compared to their total cost models. All in order to make total cost analyses come out in a way to allows the U.S. to compete and win investments and operations located here.
Instead I observe far too often some liberals looking for an argument that lets them continue to hate on businesses while avoiding and even denying how capital and labor are allocated and what impacts marginal changes in those allocations. Especially in the context of our now existing in a globally competitive economy where we have strengths but also weaknesses.
frog
July 25, 2012 at 1:22 pm (UTC -4) Link to this comment
–>Is no one arguing “Gee, wouldn’t you like us to bring this money back to the USA and get it circulating in the economy?” If not, then I don’t understand the exec’s point. If you get to keep all your money by staying out, then why aren’t you laughing all the way to your off-shore luxury palace?
Or is it that they would like to be living in and running a business in a first-world nation, but these damn developed countries keep asking for money to maintain the infrastructure?
Modusoperandi
July 25, 2012 at 4:16 pm (UTC -4) Link to this comment
davidct “As usual things are not what they seem when talking tax rates which are not actually being paid equally.”
Everybody knows that “equally” is socialism. SOCIALISM!!!
Ichthyic
July 25, 2012 at 5:09 pm (UTC -4) Link to this comment
Instead I observe far too often some liberals looking for an argument that lets them continue to hate on businesses while avoiding and even denying how capital and labor are allocated and what impacts marginal changes in those allocations.
five bucks says that if you weren’t so totally tweaked, you would notice that it’s the CONSERVATIVES that have been consistently denying how capital and labor are, and should be, allocated.
Michael Heath
July 25, 2012 at 7:20 pm (UTC -4) Link to this comment
Ichthyic’s response to my prior post:
This is an absurd claim, and highly dishonest. I doubt anyone’s been a more strident voluminous critic in this forum than me when it comes to conservative economic policies. But conservative failures and reprehensible behavior doesn’t mean some liberals are by default right, instead some make arguments equivalent in quality to AGW denialists. They avoid, even deny what the experts understand and confidently and monolithically prescribe. In the prior the link they even deny simple math – like denying that adding costs to an investment, and therefore reducing the return on said investment will not decrease the amount of said investment and not cause said investment to deployed elsewhere where costs are lower and returns higher.
Luckily for us powerful Democrats have over the years come to leverage what economists understand and promote accordingly rather than equate a discredited political ideology as a valid method to set fiscal and monetary policy. [Link between Democrats and economists' prescriptions is not made explicit; but anyone mildly informed should see what economists promote is largely correlative to what the Dems who run the party promote while conservatives universally reject most of these prescriptions.]
Ichthyic
July 26, 2012 at 7:16 am (UTC -4) Link to this comment
I doubt anyone’s been a more strident voluminous critic in this forum than me when it comes to conservative economic policies. But conservative failures and reprehensible behavior doesn’t mean some liberals are by default right,
which, of course is a strawman of what I said.
speaking of intellectual dishonesty…
Michael Heath
July 26, 2012 at 9:28 pm (UTC -4) Link to this comment
Ichthyic responds to me:
Uh, no. Nice projection though.