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Many firms avoided taxes in boom { April 6 2004 } Original Source Link: (May no longer be active)
http://money.cnn.com/2004/04/06/news/economy/taxes_corporate.dj/http://money.cnn.com/2004/04/06/news/economy/taxes_corporate.dj/
Many Firms Avoided Taxes in Boom
April 6, 2004: 7:32 AM EDT
WASHINGTON - More than 60% of U.S. corporations didn't pay any federal taxes for 1996 through 2000, years when the economy boomed and corporate profits soared, Tuesday's Wall Street Journal reported, citing the investigative arm of Congress.
The disclosures from the General Accounting Office are certain to fuel the debate over corporate tax payments in the presidential campaign. Corporate tax receipts have shrunk markedly as a share of overall federal revenue in recent years, and were particularly depressed when the economy soured. By 2003, they had fallen to just 7.4% of overall federal receipts, the lowest rate since 1983, and the second-lowest rate since 1934, federal budget officials say.
The GAO analysis of Internal Revenue Service data comes as tax avoidance by both U.S. and foreign companies also is drawing increased scrutiny from the IRS and Congress. But more so than similar previous reports, the analysis suggests that dodging taxes, both legally and otherwise, has become deeply rooted in U.S. corporate culture. The analysis found that even more foreign-owned companies doing business in the U.S. -- about 70% of them -- reported that they didn't owe any U.S. federal taxes during the late 1990s.
The basic federal corporate-tax rate for big corporations is 35%. But the federal tax code also offers many credits and loopholes that allow many companies to pay far less than that.
Despite the rising rate of tax avoidance among corporations, collections from the federal corporate income tax rose to more than $200 billion in 2000, from $ 171 billion in 1996. But over the next three years they fell each year, reaching $131.8 billion in 2003 -- the lowest annual total since 1993. They are projected to reach $168.7 billion this year.
Wall Street Journal Staff Reporters John D. McKinnon and Rob Wells contributed to this article. Dow Jones Newswires 04-06-04 0158ET Copyright (C) 2004 Dow Jones & Company, Inc. All Rights Reserved.
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