"Corporations Received $180 Billion In Tax Breaks Last Year — The Same Amount They Paid In Taxes"
As the corporate tax reform debate continues to simmer in Washington, a new report from the Government Accountability Office shows that America’s corporations received $181 billion in tax breaks in 2012, an amount equal to what they actually paid in taxes. That’s the largest total of corporate tax breaks since 1986, and the bulk of the breaks come from two areas: a new provision, enacted in 2011, that allows corporations to write off 100 percent of capital expenses and the long-standing provision that allows corporations to exempt overseas profits from taxation until they return them to the United States.
The increase in claimed tax breaks comes as corporations hauled in record profits last year, largely because they pushed more money into overseas tax havens like Bermuda, the Cayman Islands, and Luxembourg. The largest American corporations now hold nearly $1.5 trillion overseas, and avoiding taxes on foreign profits made up a sizable share of the breaks they claimed in 2012, Reuters reports:
Corporate tax deferral, the potential indefinite postponement of U.S. taxes on profits held offshore, makes up nearly a quarter of that sum, according to a Government Accountability Office report released on April 15, which is the deadline for individuals to file their tax returns.
Even as the amount held overseas is increasing, corporate lobbying groups and congressional Republicans are pushing reforms that would only make offshoring profits easier. A so-called “territorial” tax system, favored by the GOP and corporations, would exempt most foreign profits from any American taxation, providing further incentive to move profits to tax havens. By pushing investment overseas, a territorial system would lead to the creation of 800,000 jobs in foreign countries that could have otherwise come to the U.S., according to one economist.
The push for such system has stemmed from complaints that the U.S. has the highest statutory corporate tax rate in the world, and while that is true, few corporations actually pay it. The U.S. collects less in tax revenue as a percentage of its economy than all but one other industrialized country, and corporate tax levels fell to a 40-year low in 2011 even as profits hit a 60-year high. According to a recent report from the U.S. Public Interest Research Group, corporate tax avoidance cost the average individual taxpayer $1,026 in 2012 alone.