> > > > Reports filed by Microsoft and Cisco Systems > indicate that they paid no (US) federal income > taxes in 1999 because stock options exercised > by employees wiped out profits for tax purposes. > > > > >From: [EMAIL PROTECTED] >To: [EMAIL PROTECTED] >Subject: NYTimes.com Article: Study Finds That Many Large Companies Pay No >Taxes >Date: Fri, 27 Oct 2000 13:01:08 -0400 (EDT) > > >Study Finds That Many Large Companies Pay No Taxes >http://www.nytimes.com/2000/10/20/business/20TAX.html > >October 20, 2000 > >By DAVID CAY JOHNSTON > >Goodyear,Texaco, Colgate-Palmolive, MCI WorldCom and eight other >large corporations earned more than $12.2 billion in profits in >1996 through 1998, but none of them ended up owing corporate income >taxes over that period, according to a study released yesterday. >Indeed, as a group, the companies received $535 million in credits >or refunds, the report found. > > The study of 250 large publicly traded companies showed that 24 >owed no tax or received credits against past or future tax >obligations in 1998, up from 13 in 1997 and 16 in 1996. The study >also found that 71 of the 250 companies paid taxes at less than >half the official 35 percent corporate rate during the three-year >period. > > The study was conducted by the Institute on Taxation and Economic >Policy, a Washington research organization associated with Citizens >for Tax Justice, a nonprofit group supported in part by labor >unions. The group argues that the tax system favors the rich and >politically connected. > > Corporate profits overall soared 23.5 percent during the >three-year period, but corporate tax revenues grew just 7.7 >percent, a disjunction that has drawn intense interest from the >Treasury Department and some members of Congress who are concerned >about the growing market for tax shelters and their abuse. > > In recent years, Congress has watered down the 1986 overhaul of >the tax laws, which lowered rates and eliminated most tax shelters, >and was supposed to simplify reporting. The recent changes have >opened fresh opportunities for corporations to cut their taxes, the >study found. > > "Corporate taxes are not rising along with profits because >companies have found all sorts of ways to get around the reforms in >the 1986 tax act," said Robert S. McIntyre, the director of >Citizens for Tax Justice. "Companies also have gotten a lot of help >from Congress, especially in gutting the minimum tax rules." > > Mr. McIntyre said that he and T. D. Coo Nguyen, the co-author, >spent more than two years examining financial statements the >companies sent to shareholders. > > All but 18 of the companies studied are on the Fortune 500 list, >and the others are in the Fortune 1000. He said companies were >excluded if they lost money or their tax disclosures "were crafted >so that you could not figure them out." > > At least two companies objected to the study's methodology. > >Keith Price, a spokesman for Goodyear, said the study did not >appear to consider an accounting rule affecting its sale of a >pipeline subsidiary in 1998. It made no objection to the 1996 and >1997 figures. > > Michael N. Ambler, Texaco's chief tax counsel, said that his >company had tax disputes with the Internal Revenue Service that >were unresolved after more than a decade. If those disputes are >settled with a refund, he said, that can easily distort the figures >for any one year. He said that even the three-year study period was >too short to give an accurate picture. > > Timothy McCormally of the Tax Executives Institute, which >represents officials at large companies, told Bloomberg News that >the companies named in the report did nothing wrong. "There is >nothing in the report that suggests that any of this results from >any illegal or improper activity," he said. > > The study by the Washington institute showed that the corporate >tax burden was falling in many cases because of the growing use of >stock options, which are an expense for tax purposes but do not >count against profits reported to shareholders. > > Recent annual reports filed by Microsoft and Cisco Systems >indicate that they paid no federal income taxes in 1999 because >stock options exercised by employees wiped out profits for tax >purposes. > > The study found that General Electric, I.B.M., Pfizer, Intel and >Bristol-Myers Squibb also sharply reduced their tax rates because >of stock options without having to show reduced earnings to >shareholders. > > The most significant factor in the easing corporate tax burden, >Mr. McIntyre said, can be traced to actions in Congress, which >relaxed the corporate minimum tax in 1993 when the Democrats were >in control of both the House and Senate, and again in 1997, after >the Republicans had taken over. Congress made it easier for >corporations to spread tax breaks and profits over many years, >including reaching back to past years to get tax breaks that could >not be used at the time. > > In at least one of the three years studied, 41 of the 250 large >companies studied paid no federal income tax. Those 41 companies >reported $25.8 billion in profits to shareholders in the years they >paid no taxes. If they had been obligated to pay the full 35 >percent corporate rate, the tax bill would have been $9 billion, >but the companies received $3.2 billion in refunds. > > In total dollars, General Electric was the biggest beneficiary of >tax breaks, the study said, saving $6.9 billion in three years. The >company paid $2.1 billion in income taxes on $25.8 billion in >profits, for a tax rate of 8.1 percent. > > The highest tax rate for the three years was paid by Winn-Dixie >Stores, which paid an average of 35.7 percent of its 1996 through >1998 profits in federal income taxes. It was one of two companies >that paid more than the 35 percent statutory rate because of >multiyear tax rules. The other was Paccar. > > > >The New York Times on the Web >http://www.nytimes.com > >Copyright 2000 The New York Times Company > > > > > > > ....................................................... > If not here, where? If not now, when? If not us, who? > > Bob Olsen, Toronto [EMAIL PROTECTED] > ....................................................... >
