Many Firms Avoided Taxes in Boom (60% pay no federal tax)

CNNmoney ^ | April 6, 2004

[gd124]

WASHINGTON - More than 60% of U.S. corporations didn't pay any federal taxes for 1996 through 2000, years when the economy boomed and corporate profits soared, Tuesday's Wall Street Journal reported, citing the investigative arm of Congress.

The disclosures from the General Accounting Office are certain to fuel the debate over corporate tax payments in the presidential campaign. Corporate tax receipts have shrunk markedly as a share of overall federal revenue in recent years, and were particularly depressed when the economy soured. By 2003, they had fallen to just 7.4% of overall federal receipts, the lowest rate since 1983, and the second-lowest rate since 1934, federal budget officials say.

[explodingspleen]

So the economy booms when people don't pay taxes?

[BenLurkin]

1996-2000 were peak years in the decade of greed and corruption known as "THE CLINTOON ERA".

[oceanview]

none of the bubble startup tech companies ever made any money, so they paid no taxes. their founders/executives/employees paid taxes on the value of their stock options, California collected huge revenues and spent it as fast as they could, so when the bubble burst, they went into fiscal shock from the loss of revenues.

[oolatec]

More proof of Clinton's false economy.

[68skylark]

More than 60% of U.S. corporations didn't pay any federal taxes for 1996 through 2000.

Sorry -- my bullsh** detector just went off. This is Jason Blair type reporting.

I know these companies paid millions (or hundreds of millions) in FICA taxes, even if they didn't pay much in income taxes. So the premise of the no-tax story is just some liberal dream -- just stupid.

[b4its2late]

If I'm not mistaken, Bill Clinton was president then and he gave the American taxpayer a retroactive tax increase and it was a fairly large one too..... Balancing the books on the back of the middle class.

[CMailBag]

Corporations NEVER pay taxes. Stockholders and customers pay taxes.

[syriacus]

It's obviously Bush's fault. His tax cuts did this. Retroactively. (He's got a time machine) [/sarcasm]

[xrp]

Ha, you beat my to it.

[Robert A Cook PE]

What "boom" ...

Thought the dnc told us we were in depression ...

Worst since the 1930's, wasn't it?

[familyofman]

Yes, but they're all very patriotic and outsource just as many jobs as they can. You can tell they're patriots - they wear American flags on their 'italian' suit lapels.

[dennisw]

From John Dean website and yes I agree with them that the corporate tax burden has shrunk in the last 50 years

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http://216.239.53.104/search?q=cache:5_rfQJKW_BkJ:econ4dean.typepad.com/
econ4dean/2003/10/corporate_tax_b.html+corporate+tax+burden&hl=en&ie=UTF-8

 

[dennisw]

 

From John Dean website and yes I agree with them that the corporate tax burden has shrunk in the last 50 years

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http://216.239.53.104/search?q=cache:5_rfQJKW_BkJ:econ4dean.typepad.com/
econ4dean/2003/10/corporate_tax_b.html+corporate+tax+burden&hl=en&ie=UTF-8

 

Oct 18, 2003

Corporate Tax Burden Shrinking

In his economics speech a few days ago, Dean actually understated the degree to which the corporate tax burden has fallen in recent decades:

 

Consider this — from the 1930s through the 1960s, corporations paid 30 to 40 percent of the taxes, and the rest of us paid 60-70. Today, corporations pay about 13 percent of taxes. It’s time to move the balance back and take some of the burden off the individual taxpayer who’s trying to make ends meet.

 

In fact, a new report by the Center for Budget and Policy Priorities shows that the corporate share of federal tax revenues was just 7.4 percent in 2003. Let's see if Tim Russert and The New York Times go after Dean on this discrepancy. Corporate taxes have fallen by about $75 billion over the last 3 years --almost enough to cover our most recent Iraq bill.

Dean is right on about the long-term trend, however, as the chart below shows.

Contrast this with the payroll tax which used to account for about 10 percent of federal revenue in 1952 but is now about 40 percent. For those of you who don't know, the payroll tax (which is actually regressive) is conveniently omitted as an "income" tax when conservatives talk about who bears the burden of income taxes.

The report points out that while the weak economy has played a role in the recent trend, a substantial amount of this decline is due to tax avoidance strategies and tax law changes enacted since 2000.

 

[Lakeside]

So? I'm with explodingspleen on this. Lower taxes= booming economy no matter who does/doesn't pay them.

That said, there was much blatant corporation corruption in the Clinton years that authorities turned a blind eye to. With the massive tax increase & to save his own skin Clinton had to keep the numbers up.

[hinckley buzzard]

Sounds pretty shocking until you realize that for the same period of time, the NASDAQ 100 leading tech stocks, taken together, earned exactly zero profit. Cosidering what was happening to their share prices during that period, the tired phrases "internet bubble" and "tech bubble" start to take on some real meaning.

[Robert A Cook PE]

But the "drop" in taxes cited follows DIRECTLY from the lower profits of 2000-2003, not from the (implied) greater "tax cheating" that Dean wants people to believe happended.

The increase in tax-write-offs happened UNDER CLINTON, not Bush.

[hinckley buzzard]

John Dean? Since when is he being rehabilitated by the media apparatchiks?

Did the old sociopath happen to mention that even with the reductions, US corporations still pay among the highest taxes of any corporations in the western world?

Didn't think so.

[rebel_yell2]

So totally misleading I don't know where to start. What is a corporation? Any self-employed person who chooses that form of business organization, as well as the 8,000 or so publicly traded corporations. I think that there are more than 5 million "U.S. corporations." Is it surprising that 60% don't pay taxes because they aren't profitable? As a small corporation, you take your profits out as compensation expense to avoid double taxation of dividend income. Notice that this article says NOTHING about the amount of taxes paid. Also, remember that "corporations" don't pay taxes; shareholders pay "corporate" taxes and then pay taxes again on their dividends. If you own any stocks or mutual funds, YOU pay "corporate taxes." </rant off>

[dennisw]

All I know is the posted chart shows a lower corporate Federal tax burden with the slack being taken up by the non-corporate taxpayers. Of all kinds including other businesses, plus rich and poor taxpayers.