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Why Not Require Drug Tests of Farmers
Receiving a Fortune in Government 
Subsidies?

BuzzFlash

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More Tax Dollars There, Not Here

By David Cay Johnston*

July 18, 2013--No other modern country gives corporations the unfettered power found in America to gouge customers, shortchange workers, and erect barriers to fair play.

A big reason is that so little of the news addresses the private, government-approved mechanisms by which price gouging is employed to redistribute income upward.

You are being systematically exploited by powerful corporations every day.

These companies squeeze their trusting customers for every last cent, risk their retirement funds, and endanger their lives. And they do it all legally.

How?

It’s all in the fine print.

American corporations increased their use of tax credits by a whopping 25 percent in 2010, helping drive down their effective tax rates to less than half the posted 35 percent rate.

A Government Accountability Office study says the effective rate was even lower, only a bit more than a third of the statutory rate for the biggest companies.

“The increase in credits from 2009 to 2010 was almost entirely due to higher foreign tax credits,” noted Robert S. McIntyre, director of Citizens for Tax Justice, who crunched the numbers.

 “Not surprisingly, these higher foreign tax credits go mostly to large multinational corporations.”

Of the $26.8 billion increase in corporate tax credits used in 2010 compared to 2009, an astonishing 91.5 percent were foreign tax credits, which allow companies with multinational operations to offset their American tax bills dollar-for-dollar.

Because the tax credit is dollar-for-dollar that means less for Uncle Sam, more for foreign governments.

Foreign tax credits, the new IRS data show, totaled $118 billion in 2010, up from $93.6 billion in 2009.

Just 2,772 corporations, the multinational giants that own more than four-fifths of all the corporate assets in the United States, used a stunning 99.3% of those increased foreign tax credits.

The other $163 million of foreign tax credits were used by some of the 5.8 million other corporations filing American tax returns.

While foreign tax credits increased by $24.5 billion, the general business credit grew by only $2.1 billion. Corporate Alternative Minimum Tax Credits grew by a mere $166 million–note the “m.”

The general credits increased 15.9 percent, the corporate AMT 11.3 percent, far below the foreign tax credit increase of 24.7 percent.
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*David Cay Johnston is an American investigative journalist and author, a specialist in economics and tax issues, and winner of the 2001 Pulitzer Prize for Beat Reporting.