Wells Fargo received nearly $18 billion in tax breaks from 2008 to 2010,… (Scott Eells, Bloomberg )
Many of the nation's most profitable companies are paying far less than the government's 35% corporate income tax rate, with dozens paying no taxes at all, according to a controversial new report.
Left-leaning advocacy and research groups Citizens for Tax Justice and the Institute on Taxation and Economic Policy examined 280 companies and concluded that they paid an average rate of 18.5% from 2008 through 2010 — about half the official rate.
Several firms mentioned in the report lashed out at the findings.
General Electric Co., which according to the study averaged a negative 45.3% tax rate over three years due in part to nearly $8.4 billion in tax subsidies, accused the report of being "inaccurate and distorted" and said that it expected to pay 30% in overall tax this year.
Verizon Wireless said the study, which called out the company for landing $12 billion in tax breaks, was "union-orchestrated" as well as "deceptive and politically motivated." The broadband giant said that it paid $1.8 billion in taxes over the three-year period.
The study was culled from Fortune 500 firms that had been profitable for each of the last three years. Report authors said their findings were not meant to be "anti-business."
They concluded that only a quarter of the companies it surveyed forked over close to 35% of their U.S. profits, while another quarter of the 280 firms paid less than 10%.
The report also found that 78 companies paid nothing — or had a negative tax rate — for at least one year because of nearly $223 billion in tax breaks, 17% of which went to the financial services industry. Thirty companies went tax-free for all three years, researchers found.
Wells Fargo alone received nearly $18 billion in tax breaks during the period, researchers found.
The bank said in a statement that the period noted in the study was "unusual" because of the company's significant losses and acquisition of the Wachovia financial services company, which reduced taxable income.
Wells Fargo added that it "fulfills all tax obligations" and expects to pay heavy income taxes this year, saying that the report "takes data out of context to advance an agenda."
In addition to federal income taxes, corporations are also on the hook for state and local income taxes as well as sales, property and payroll taxes, said Will McBride, an economist with the nonpartisan Tax Foundation research group.
For all but three years from 1994 through 2008, corporations paid out more in taxes than they pulled in through after-tax profits, he said in a statement.