U.S. corporations evaded about $60 billion in federal income taxes last year by shifting profits to foreign subsidiaries, according a new study by The Greenlining Institute, a Berkeley, Calif.-based group that promotes racial and economic justice.
The study also found that America's Fortune 100 companies, some of which were cited for avoiding U.S. taxes, took in nearly $90 billion in government contracts during the same period.
The report, released Thursday and titled “Corporate America Untaxed: Tax Avoidance on the Rise,” found that the most successful companies have added 44 new subsidiaries in countries recognized as tax havens since the Government Accountability Office examined the subject three years ago.
Among the identified tax dodgers are General Electric, Google, Dell and Merck.
“America’s richest corporations avoid $60 billion a year in taxes by hiding $1 trillion in profits overseas while making billions in federal contracts,” said the Greenlining Institute's general counsel, Samuel Kang, who co-authored the report.
“It’s unpatriotic, it’s unfair and we can’t afford it," he said. "It should be illegal, yet Congress is looking to cut the deficit by slashing Medicare, Social Security, food safety, education and health without collecting another dime from these wealthy companies.”
Still, the Fortune 100 American companies that earned the most criticism in the report accounted for $6.7 trillion in global revenue -- though they're benefiting from government contracts and tax breaks, that also adds up to nearly half of U.S. GDP last year.
The report comes as congressional leaders race to resolve a debt crisis before the nation runs out of money next week to pay all of its bills. For months, both sides have been locked in partisan debate over the terms for extending the nation’s borrowing limit in exchange for steep spending cuts. Democrats have sought to eliminate tax breaks for corporations and the wealthiest Americans, but Republicans have refused to include new revenues in any proposal.
The report offers fresh ammunition to Democrats even though any deal now is unlikely to include tax increases.
“Individual Americans pay on average 20.4 percent of their income in federal income taxes, while Exxon pays 14.2 percent, IBM pays 3.8 percent and DuPont and General Electric pay virtually nothing – even though the corporate tax rate is supposed to be 35 percent,” said Tuan Ngo, a legal associate for the institute who co-authored the report.