Citizens for Tax Justice: Corporations Are Cheating the Government

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Citizens for Tax Justice (CTJ) — a left-leaning public policy think tank and advocacy group — is out with a new report called “The Sorry State of Corporate Taxes” that is one part analysis and one part attack ad. CTJ examined 288 major U.S. businesses between 2008 and 2013 and concluded that 26 of them “enjoyed negative income tax rates,” and that 111 of them had a negative federal income tax rate in at least one year in the five-year period. CTJ calculated that the “total amount of federal income tax subsidies enjoyed by the 288 profitable corporations over the five years was $362 billion,” and highlighted companies like The Boeing Company (NYSE:BA), General Electric Company (NYSE:GE), and Verizon Communications Inc. (NYSE:VZ) as examples.

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If the conclusions are accurate, then the report could be damning. America’s tax code is a labyrinthine monster, a common enemy that both Democratic and Republican lawmakers would like to change or overhaul, if possible. Most people believe the tax system is unfair — a CNN/ORC poll conducted in 2012 put the percentage at 68 percent in 2012 — and everyone thinks it’s too complicated. From Main Street’s point of view, the tax system has been perverted for the enjoyment of special interest. From the point of view of special interest groups, the tax system is a handicap in a global, competitive market.

But policy changes are hard. Democrats and Republicans idealize different tax systems and without the willpower to compromise every change to the tax code is either pushed through on partisan lines or conceded to under duress. The result is a Frankenstein patchwork that is not effective, not efficient, and that can be gamed by those with the means. CTJ argues that this is exactly what major U.S. corporations are doing.

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