This one caught me off guard. I mean I figured corporations were taking advantage of every tax shelter and loophole they could but not to this degree....
From the AP:
Most companies in US avoid federal income taxesThis is obviously blatantly unfair. I've long thought that the tax system needs to be overhauled but to me this report shows that that the need for an overhaul needs to become a priority. The question is how to do it without sending shockwaves through the market. The last thing we need right now is for the price of every good and service to go up by a double digit percentage.Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.
The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period.
Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.
...
More than 38,000 foreign corporations had no tax liability in 2005 and 1.2 million U.S. companies paid no income tax, the GAO said. Combined, the companies had $2.5 trillion in sales. About 25 percent of the U.S. corporations not paying corporate taxes were considered large corporations, meaning they had at least $250 million in assets or $50 million in receipts.
The GAO said it analyzed data from the Internal Revenue Service, examining samples of corporate returns for the years 1998 through 2005. For 2005, for example, it reviewed 110,003 tax returns from among more than 1.2 million corporations doing business in the U.S.
Personally I like the idea of scrapping the current code for a flat tax on profits. I'm liking 15% as its high enough to be significant but low enough to keep our corporate tax rates highly competitive with other countries (and much lower than many European countries). In order to reduce the impact on the marketplace it would have to be gradually phased in. Lets say 5% the first year with a 1% increase the second year and then a 3% increase over the next three years. Based on the untaxed profits the GAO reports that would equal an additional 375 billion dollars a year in tax revenues.
That amount could have a huge impact on this nation. It would go a long way to helping fund sicial security or reduce the deficit or lower the rate that individual citizens are required to pay in taxes. The problem is finding political leaders willing back such a tax code reform.After all it doesn't benefit any of them to increase taxes on two thirds of their corporate donors.
How do we get this problem under the scrutiny of the public eye? The best I can do is hope that there are presidential YouTube deabtes and pray that my question on this matter gets picked. Whats needed is a bipartisan grassroots effort to bring this issue into the limelight. The question is who is going to pick up that torch and run with it?
Where's Teddy Roosevelt when you need him?
cross posted at We Op-Ed
|