Respectfully submitted by Lawrence Rafferty (rafflaw)- Guest Blogger
I have written in the past about corporations dodging taxes, but this latest story out of Washington takes the cake. Susan Ford, an executive with Corning, Inc. testified recently at a House Ways and Means committee meeting and made the following claim. “American manufacturers are at a distinct disadvantage to competitors headquartered in other countries. Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers, and virtually all operate under territorial systems which encourage investment both abroad and at home.” Think Progress That is a very strong statement coming from Ms. Ford. What is really interesting is that her claim that foreign companies face a lower corporate tax rate would be important issue, if it only was true!
“In fact, according to Citizens For Tax Justice, the company received a $4 million refund from 2008 to 2010. The truth is that Corning, Inc. is one of at least 26 companies that paid zero Federal taxes on their profits. ” Think Progress According to the Citizens for Tax Justice, Corning actually paid an effective tax rate of -0.2 percent for 2011! Now, as many on this blog can attest to, I am no math whiz, but a negative tax rate is a good thing, isn’t it? The truth that Ms. Ford and many other Corporate executives don’t want you to know is that the United States, while it does have one of the highest marginal tax rates, its effective tax rate is lower than most. In fact, according to Think Progress, the effective rate in 2011 was the lowest it has been in 40 years!
“U.S. corporate taxes that were actually paid (the effective rate) fell to a 40 year low of 12.1 percent in fiscal year 2011, despite corporate profits rebounding to their pre-Great Recession heights. The U.S. both taxes its corporations less and raises less in revenue from corporate taxes than its foreign competitors:
Why wouldn’t Ms. Ford and her fellow corporate executives want you to know that they are paying an effective tax rate that is so low that they are actually obtaining refunds from the IRS even though they are earning Billions in profits? Why do politicians keep repeating the meme that our corporations are being bogged down financially by the taxes that they are being charged and that they just can’t compete against these foreign companies that pay less taxes? When you are actually paying little or no taxes like the 26 companies mentioned above, how much lower can your taxes really go?
How can you not be competitive when you are not paying any Federal taxes at all? It is time for politicians of all stripes to actually tell the American public the truth about corporate taxes. The good Benedictine Nuns taught me that it is always better to tell the truth. Our long nosed fellow shown above learned the lesson too. So, here it goes. It isn’t Federal taxes that are preventing United States corporations from being competitive! Now, was that so hard? My nose feels much better now.
By the way, should there be an investigation into the untruths that Ms. Ford testified to? Let’s here what you think!
Additional Reference: Citizens for Tax Justice; Susan Ford Testimony
They had overall profits on a global basis. Apparently if you look at the US alone, they incurred a loss. US multinationals only pay US income tax on profits earned by the US corporate group, not on profits earned by foreign subsidiaries.. US income tax is incurred, in general, on the profits earned by foreign subsidiaries, only when those profits are distributed by the foreign subsidiary to its US owners. The above is how the tax returns are actually filed, and explains the cash tax cost. Tax expense for financial statement purposes is reported on a consolidated basis, and has only a tenuous relationship to cash taxes.
Bron 1, July 22, 2012 at 6:04 pm
here is 2011 and 2010 financial report for Corning:
http://www.corning.com/uploadedFiles/Corporate/ww/News_Center/News_Releases/2012_News_Releases/docs/3BLP29TT11.pdf
it looks like they paid 408 million in taxes and paid a 0.23 dividend per share.
It also looks like they took some tax benefits from previous years.
Maybe one of the accountants could explain it?
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Bron, I’ll go out on a limb here. GE used to say their financial statements were totally transparent. Then they stopped saying that.
Bron,
If you read the linked information, Corning had 1.9 Billion in profits during the time associated with the refunds.
here is 2011 and 2010 financial report for Corning:
http://www.corning.com/uploadedFiles/Corporate/ww/News_Center/News_Releases/2012_News_Releases/docs/3BLP29TT11.pdf
it looks like they paid 408 million in taxes and paid a 0.23 dividend per share.
It also looks like they took some tax benefits from previous years.
Maybe one of the accountants could explain it?
Bron,
Yes Corning made a profit.
rafflaw:
did Corning make any profit? When you say refund what exactly do you mean? What was the money for? Did the government just give Corning a chunk of cash or was it a refund from taxes paid over and above what was owed? Did they have write-offs or deprecations they didnt take and moved to the next year for business reasons like higher income in the next year?
You also have to remember this:
“From a purely economic standpoint, it makes no sense to tax corporations at all, because only people pay taxes, not legal entities. The corporate tax is paid by customers in terms of higher prices, by suppliers in terms of lower volumes of business, by employees in terms of lower wages and by stockholders in terms of lower returns. Many countries used to have higher corporate-tax rates than the United States, but, over time, they realized they were losing business — and jobs — to countries with lower rates; so most countries have been reducing their corporate-tax rates to attract new businesses and global firms.”
Trickle down economics — that’s the big dogs peeing on the little dogs
“By the way, should there be an investigation into the untruths that Ms. Ford testified to?”
Absolutely. Especially if her testimony was under oath. Perjury before a Congressional committee is still perjury.
Well played, raff.
bettykath,
You have to throw the elbow more than once. They won’t forget. A choke hold until they’re unconscious might be better.
raff, What the state giveth, the state can taketh. Corporations that are bad citizens should have their charters revoked. Of course, those who profit from dividends would object. And there would be job losses so communities might not be too pleased. But revocation of one or two of the worst offenders just might make the rest of them wake up. From West Wing, quoting a basketball coach, (paraphrased) “throw the elbow. do it once so it is seen. you’ll never have to do it again.” We need to throw an elbow.
American manufacturers are at a distinct disadvantage to competitors headquartered in other countries.
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Really. Put in a real enforceable flat tax and see what happens with that. Oh, wait. Certain individuals are trying to get elected.
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The truth is that Corning, Inc. is one of at least 26 companies that paid zero Federal taxes on their profits. ” Think Progress According to the Citizens for Tax Justice, Corning actually paid an effective tax rate of -0.2 percent for 2011! Now, as many on this blog can attest to, I am no math whiz, but a negative tax rate is a good thing, isn’t it? The truth that Ms. Ford and many other Corporate executives don’t want you to know is that the United States, while it does have one of the highest marginal tax rates, its effective tax rate is lower than most. In fact, according to Think Progress, the effective rate in 2011 was the lowest it has been in 40 years!
===========================================================Corning knows how to make glass.
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Why wouldn’t Ms. Ford and her fellow corporate executives want you to know that they are paying an effective tax rate that is so low that they are actually obtaining refunds from the IRS even though they are earning Billions in profits? Why do politicians keep repeating the meme that our corporations are being bogged down financially by the taxes that they are being charged and that they just can’t compete against these foreign companies that pay less taxes? When you are actually paying little or no taxes like the 26 companies mentioned above, how much lower can your taxes really go?
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http://www.spike.com/video-clips/tch9pm/enron-the-smartest-guys-in-the-room-sharon-watkins-star-witness
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Ask Enron Sharon. She was worried about losing her job.
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The good Benedictine Nuns taught me that it is always better to tell the truth. Our long nosed fellow shown above learned the lesson too. So, here it goes. It isn’t Federal taxes that are preventing United States corporations from being competitive! Now, was that so hard? My nose feels much better now.
By the way, should there be an investigation into the untruths that Ms. Ford testified to? Let’s here what you think!
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That’s what I think.
The corporate charter penalty is an interesting one bettykath.
Ms. Ford should be prosecuted personally and her company as well since she was putting forth the company lie.
Corporations that present such falsehoods should have their charters put in jeopardy and revoked if the lies aren’t corrected or if additional lies are told.
Gee, I thought you were allowed to lie to Congressional committees.
I mean defendents in criminal trials are allowed to lie or take the fifth.
Shouldn’t corporate “persons” be allowed the same rights.
I thoúght SCOTUS hsd ruled so. Like no need to bring in more cases foe rulings, it is a general thing now.
shano.
that is a lot of coin to be hiding from taxes!
http://www.guardian.co.uk/business/2012/jul/21/offshore-wealth-global-economy-tax-havens
Wealth doesn’t trickle down – it just floods offshore, new research reveals
A far-reaching new study suggests a staggering $21tn in assets has been lost to global tax havens. If taxed, that could have been enough to put parts of Africa back on its feet – and even solve the euro crisis
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.
James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.
He shows that at least £13tn – perhaps up to £20tn – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”. According to Henry’s research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than £4tn in 2010, a sharp rise from £1.5tn five years earlier.
The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.
Oil-rich states with an internationally mobile elite have been especially prone to watching their wealth disappear into offshore bank accounts instead of being invested at home, the research suggests. Once the returns on investing the hidden assets is included, almost £500bn has left Russia since the early 1990s when its economy was opened up. Saudi Arabia has seen £197bn flood out since the mid-1970s, and Nigeria £196bn.
“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says.
The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry’s calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world’s population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.
“These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people,” said John Christensen of the Tax Justice Network. “People on the street have no illusions about how unfair the situation has become.”
TUC general secretary Brendan Barber said: “Countries around the world are under intense pressure to reduce their deficits and governments cannot afford to let so much wealth slip past into tax havens.
“Closing down the tax loopholes exploited by multinationals and the super-rich to avoid paying their fair share will reduce the deficit. This way the government can focus on stimulating the economy, rather than squeezing the life out of it with cuts and tax rises for the 99% of people who aren’t rich enough to avoid paying their taxes.”
Assuming the £13tn mountain of assets earned an average 3% a year for its owners, and governments were able to tax that income at 30%, it would generate a bumper £121bn in revenues – more than rich countries spend on aid to the developing world each year.
Groups such as UK Uncut have focused attention on the paltry tax bills of some highly wealthy individuals, such as Topshop owner Sir Philip Green, with campaigners at one recent protest shouting: “Where did all the money go? He took it off to Monaco!” Much of Green’s retail empire is owned by his wife, Tina, who lives in the low-tax principality.
A spokeswoman for UK Uncut said: “People like Philip Green use public services – they need the streets to be cleaned, people need public transport to get to their shops – but they don’t want to pay for it.”
Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals’ financial worth available to the tax authorities in their home countries as a matter of course. Tax Justice Network would like to see this kind of exchange of information become standard practice, to prevent rich individuals playing off one jurisdiction against another.
“The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy,” said Henry.
http://www.guardian.co.uk/business/2012/jul/21/global-elite-tax-offshore-economy
If they can prosecute Clemens for perjury, why not HER? I think that would induce more folks to tell the truth in their testimony.
By the way, should there be an investigation into the untruths that Ms. Ford testified to?
Yep
This lie figured in one of the Obama McCain debates. McCain said, high tax rate and Obama said yes but because of loopholes, very low effective tax rate.
Why do you want to keep a good lie down.