As the deadline approaches for Americans to file their taxes, a significant portion of profitable corporations may not pay a dime. The reason? Corporate tax loopholes.
Through a new campaign, the National Education Association is exposing the true cost of corporate tax loopholes…a shrinking middle class and the erosion of critical services, including public education. Part of the effort includes a one-minute animated short called The Hole and an online petition for the public to show support for closing corporate tax loopholes.
Corporate tax loopholes come in a variety of forms. One allows corporations to indefinitely defer U.S. taxes on offshore profits, incentivizing the manipulation of profits in an attempt to show a greater portion as being made overseas. Another large loophole lets companies deduct the costs of investments in vehicles and other equipment faster than they wear out. This allows companies to basically double dip by getting a loan to buy the equipment, and then write off both the interest and depreciation. Yet another loophole serves as a subsidy to the highly-profitable oil and gas industry.
As more corporations avoid contributing to state treasuries, the burden of paying for budget shortfalls has been placed on average working families and critical public services. Over the past few years, education budgets have been slashed across the country as lawmakers declare their states to be “broke.”
A recent report by the Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP) reveals why so many Americans are outraged. The study shows that states may have lost a significant amount in corporate tax revenue during the peak recession years of 2008-2010. In analyzing the tax returns of 265 of the richest S&P 500 corporations during those years, the CTJ and ITEP found that the companies reported $1.33 trillion in domestic profits, but paid states only about half of what they would have if they had paid at the average corporate income tax rate of all states. The report also found that 68 corporations reported paying zero state corporate taxes in at least one year between 2008 and 2010.
“Students and working families are feeling the adverse effects of a carefully crafted, perfect storm,” said Dennis Van Roekel, president of NEA. “At home, families are struggling to hold on to what they have. At school, students are confronted with cuts to the critical resources they need to succeed. Big businesses are sitting on record profits, and are taxed at historically low rates. It is time we put people ahead of profits.”