Another day, another corporation receiving massive tax breaks by the government. Most recently, it was $7 million from the Trump/Pence administration to Carrier (owned by United Technologies) to stop the company from moving a factory to Mexico. Not all the jobs will be saved, but it’s still being considered a win by the Capitalist-in-chief. Even before he entered politics, Trump the businessman knew how to work the system to get himself millions of dollars in tax breaks. This practice of corporate welfare isn’t new or even that unusual.

Here is a map of the United States, filled in by which company got the largest handout (via targeted tax breaks, grants, and other subsidiaries) in each state.

This infographic was published first on reason.com

The post The United States of corporate welfare appeared first on Occasional Planet.

At the very moment that Americans are becoming more aware and upset with disparities in income, wealth and corporate influence, Illinois Governor Quinn has signed a tax break benefiting the state’s large corporations. In particular, this bill benefits CME of Chicago, which had threatened to leave the State if they did not get their way.

The announcement on the signing of this bill came late in the day on Friday, December 16, 2011. A late- in-the-day-Friday announcement is typically a sign that the there is no desire to publicize the action to the general public. On the other hand, SB 400, which is a companion bill to the corporate tax cut bill, was not signed. The most probable reason is that the Governor is waiting for a more opportune moment to sign the companion bill, so that it will receive plenty of press attention.

Sears and the Chicagoland Chamber of Commerce have already made press releases praising the Governor for signing the corporate tax break bill. As of this moment, the general public has not responded to the Governor’s action. The bill had been previously sold as a method of keeping jobs in Illinois, which was being denounced as a “business unfriendly” state.

The truth is that prior to the enacting of this bill, Illinois ranked 23^rd nationally for state tax burdens on business. That places the state about in the middle – neither exceptionally high, nor lower than average.

The push to give big business another favor looks a little like blackmail with business threatening to leave if they did not get their way. In fact, there are large companies in Illinois that pay little or no tax due to loopholes in the law. Baxter International and Integrys Energy Group both paid zero in taxes while earning over $1.7 billion in profits.

There are also corporations in Illinois that are paying state taxes commensurate with what the law calls for. The difference is that some corporations are “fortunate” enough to have industry-specific tax breaks. The difference seems to be that some corporations are large and aggressive enough to threaten legislators and the Governor with relocation from the state if they do not get their way. Baxter has been skillful enough in its economic blackmail that it has received $21 million from the state of Illinois, rather than paying taxes. This at a time when the state has been forced to delay payment of its bills and the Governor regularly proposes laying off large numbers of employees in order to balance the budget. The harm that is done to the state is difficult to calculate, but could be as high as $28 billion in lost revenue from 2008 to 2010.

The post Xmas bonus: a corporate-tax-cut deal for big Illinois companies appeared first on Occasional Planet.

What was your income tax rate in 2009? Last year Bank of America, Citibank and General Electric paid 0% in taxes. They paid nothing. In other words, you paid more taxes than Bank of America, Citibank and General Electric combined.  So exactly who is it that is being burdened with high tax rates?  The answer is: You and me. Ordinary Americans are shouldering the tax burden for corporations that make hundreds of millions, if not billions in profit, yet contribute little to nothing to help pay for their share of taxes.

Conservatives endlessly complain about the onerous corporate tax burden that is stifling U.S. businesses.  The top corporate tax rate is 35%, but in reality corporations pay very little in taxes. For example, in 2009, Ford paid 2.3%, Google paid 2.4%, and Verizon paid a whopping 10.5%. The most important employees in these companies are their tax lawyers, who apply tax loopholes that effectively shift the tax burden of the United States from corporations to ordinary citizens.

According to a Government Accountability Office report issued in August of 2008, most corporations, including the vast majority of foreign companies doing business in the United States, pay no income taxes. During the eight-year period covered by the report, 72 percent of foreign-owned corporations went at least one year without owing taxes, and the same was true for 55 percent of domestic corporations.

The GAO says small companies were much more likely to pay no taxes than larger companies. But, according to the report, more than 3,500 large domestic corporations—with more than $250 million in assets or $50 million in gross receipts—did not pay taxes in 2005. These companies are not avoiding taxes by using illegal tactics. Eighty percent of the companies studied paid no taxes because they didn’t generate any profit after expenses. Others used provisions of the tax code, or “loopholes,” to lower or eliminate their liability.

Some lawmakers are not happy about this.  “It’s shameful that so many corporations make big profits and pay nothing to support our country,” said Senator Byron Dorgan , D-N.D., in a joint press release with Carl Levin, D-Mich issued after the 2008 GAO report was released. “The tax system that allows this wholesale tax avoidance is an embarrassment and unfair to hardworking Americans who pay their fair share of taxes. We need to plug these tax loopholes and put these corporations back on the tax rolls.”

How do companies like Google and others end up with a 2.4% tax rate? According to Bloomberg,

The tactics of Google and Facebook depend on “transfer pricing,” paper transactions among corporate subsidiaries that allow for allocating income to tax havens while attributing expenses to higher-tax countries. Such income shifting costs the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.

The article continues:

Google is “flying a banner of doing no evil, and then they’re perpetrating evil under our noses,” said Abraham J. Briloff, a professor emeritus of accounting at Baruch College in New York who has examined Google’s tax disclosures.

The most galling aspect of Google pursuit of tax loopholes is that the company was built on the government’s dime.  The taxes you and I paid allowed them to do the initial research to launch Google.

“Who is it that paid for the underlying concept on which they built these billions of dollars of revenues?” Briloff said. “It was paid for by the United States citizenry.”

The U.S. National Science Foundation funded the mid-1990s research at Stanford University that helped lead to Google’s creation. Taxpayers also paid for a scholarship for the company’s cofounder, Sergey Brin, while he worked on that research. Google now has a stock market value of $194.2 billion.

“The system is broken and I think it needs to be scrapped,” says Avi-Yonah, director of the international tax program at the University of Michigan Law School. “Companies are getting away with murder.”

The post Conservative myths: Corporations burdened by high tax rate appeared first on Occasional Planet.