http://www.sltrib.com/2004/Apr/04112004/business/155923.asp
Nearly two-thirds of the companies operating in the United States
reported owing no taxes from 1996 through 2000, according to a recent
government study.
Foreign companies doing business here were more likely than
American-based ones to claim they owed no taxes, according to the
report filed this week by the General Accounting Office, the
investigative arm of Congress.
Among American corporations, an average of 6 in 10 reported no tax
liabilities on their U.S. income tax returns filed for the five years
from 1996 through 2000, the study found. The percentage of American
companies saying they owed nothing increased steadily but slightly in
the period, to 63 percent in 2000 from 60.3 percent in 1996.
By contrast, among foreign companies doing business here, 71
percent reported no tax liabilities for each of the five years
surveyed. In that period, the percentage of foreign companies claiming
no U.S. tax liabilities rose to 73.3 percent in 2000 from 67.6 percent
in 1996.
The study was based on an analysis of Internal Revenue Service
data on taxpayer returns from companies across a variety of
industries. It was prepared in response to requests by some members of
Congress to explore whether companies, in particular
foreign-controlled ones, are illegitimately lowering their tax bills.
The study said that age and size differences among companies could
account for some discrepancy. Foreign companies doing business here
tend to be younger, and thus have greater tax-deductible expenses. But
the study also suggested that the use of tax shelters was a factor.
Sen. Carl Levin, D-Mich., said that the study showed that
loopholes in the tax code "enable foreign-based companies to move
billions of dollars in profit overseas, on income generated in the
United States."
Still, some tax experts said that the study offered a misleading
view of tax avoidance.
Chris Edwards, director for fiscal policy studies at the Cato
Institute, a research group in Washington that favors reduced
government spending, said the study overstated the percentage of
nontaxpaying companies because it computed tax liabilities relative to
a company's total income, not to its net profit or earnings.
Total income, he said, does not take into account deductions like
salaries and interest.
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