What makes this revelation particularly painful is that so many U.S. companies are minimizing their tax payouts just as this country more than ever needs to boost its revenue, nearly 97% of which comes from taxes of all types. It needs the revenue because of spiraling deficits, and a debt burden so large that it contributed to the United States losing its pristine AAA credit rating for the first time in more than 50 years.
Here's what's really galling: So many U.S. firms are paying so little in taxes because they're taking advantage of a perfectly legal loophole in American tax law. According to that law, a U.S. -dom iciled company doesn't have to pay any taxes on money it earns overseas until that money is repatriated back to this country. So U.S. firms leave their foreign earnings overseas, and report huge bottom-line profits as a result.
Even as you read this, U.S. companies have more than $1.2 trillion worth of untaxed profits stashed in overseas accounts.
Many of these firms are household names, including Verizon Communications Inc. (NYSE: VZ), The Bank of New York Mellon Corp. (NYSE: BK), International Paper Co. (NYSE: IP), Prudential Financial (NYSE: PRU), eBay Inc. (Nasdaq: EBAY), and General Electric Co. (NYSE: GE).
GE may be the most egregious example of the situation we're describing. CEO Jeffrey Immelt made $15.2 million in 2010, when GE's profit was $75.49 billion.
And GE received a $3.3 billion tax refund.
Now a report by the Institute for Policy Studies (IPS) has revealed that GE was not alone.
If you're interested in the lowdown on some of these low-down offenders, take a look at some of the examples contained in the IPS report:
- Verizon made a total profit of $62.42 billion in 2010, and received a tax refund of $705 million. CEO Ivan Seidenberg earned $18.1 million.
- Prudential Financial brought in a total of $18.69 billion in profit in 2010. It got a $722 million tax refund from the federal government, while paying CEO John Strangfeld $16.2 million.
- eBay made a $6.59 billion profit last year, and got a $131 million tax refund. CEO John Donahoe received $12.4 million.
- Bank of New York Mellon made a profit of $9.42 billion in 2010, and received a $670 million tax refund. CEO Robert Kelly made $19.4 million.
- International Paper Co. had a profit of $6.70 billion last year, and got a $249 million tax refund. CEO John Faraci received $12.3 million.
"Corporations don't dodge taxes. The people who run corporations do," the IPS said in its report. "And these people - America's CEOs - are reaping awesomely lavish rewards for the tax dodging they have their corporations do."
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- Agence France-Presse:
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- Institute for Policy Studies:
Tags: Tax refund on billions in profits