GE, Exxon, 10 Other Major Corporations Paid Negative Tax Rate


As billionaire investor Warren Buffett likes to point out, he pays a lower annual tax rate on the tens of millions of dollars he earns than does his secretary, who makes $60,000 a year. It’s an illustration, he says, of how the backward and loophole-ridden the US tax system is.

Here’s another: Between 2008 and 2010, a dozen major US corporations—including General Electric, ExxonMobil, and Verizon—paid a negative tax rate, despite collectively recording $171 billion in pretax US profits, according to an analysis by Citizens for Tax Justice. Taken together, these companies’ tax burden was -$2.5 billion, and ten of the companies recorded at least one no-tax year between 2008 and 2010.

Here’s more from CTJ:

Not a single one of the companies paid anything close to the 35 percent statutory tax rate. In fact, the “highest tax” company on our list, Exxon Mobil, paid an effective three-year tax rate of only 14.2 percent. That’s 60 percent below the 35 percent rate that companies are supposed to pay. And over the past two years, Exxon Mobil’s net tax on its $9.9 billion in U.S. pretax profits was a minuscule $39 million, an effective tax rate of only 0.4 percent.

Had these 12 companies paid the full 35 percent corporate tax, their federal income taxes over the three years would have totaled $59.9 billion. Instead, they enjoyed so many tax subsidies that they paid $62.4 billion less than that.

If just these 12 companies had paid at a 35 percent tax rate over the past three years, total federal revenues from corporate taxes would have been 12 percent higher than they actually were.

Here’s the data from the CTJ analysis:

CTJ’s report comes as President Obama and Congress eye changes to the nation’s corporate tax code. The president says he wants to eliminate the many loopholes American companies use to reduce their tax liabilities, but offset those changes by lowering the overall corporate tax rate—what are called “revenue neutral” reforms. For their part, Republicans simply want to lower taxes across the board, for individuals and corporations alike; they say American companies already pay too much when compared with competitors in the rest of the world.

Not so, according to CTJ. “These 12 companies are just the tip of an iceberg of widespread corporate tax avoidance,” Bob McIntyre, CTJ’s director, said in a statement. “Our elected officials have a duty to the American public to make reducing or eliminating the vast array of corporate tax subsidies the centerpiece of any deficit-reduction strategy.”

OUR NEW CORRUPTION PROJECT

The more we thought about how MoJo's journalism can have the most impact heading into the 2020 election, the more we realized that so many of today's stories come down to corruption: democracy and the rule of law being undermined by the wealthy and powerful for their own gain.

So we're launching a new Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption. We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We'll publish what we find as a major series in the summer of 2020, including a special issue of our magazine, a dedicated online portal, and video and podcast series so it doesn't get lost in the daily deluge of breaking news.

It's unlike anything we've done before and we've got seed funding to get started, but we're asking readers to help crowdfund this new beat with an additional $500,000 so we can go even bigger. You can read why we're taking this approach and what we want to accomplish in "Corruption Isn't Just Another Scandal. It's the Rot Beneath All of Them," and if you like how it sounds, please help fund it with a tax-deductible donation today.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate