Profitable corporations paying minimal taxes

December 8, 2011 12:00:00 AM PST
As the battle rages in California over increasing taxes or cutting state spending, a new report on corporate taxes is raising a lot of eyebrows. A surprising number of very profitable corporations are paying either very low, or even no state income tax.

Among its causes, the Occupy movement has highlighted what it calls "corporate greed." Now it has a study to back up its claims. The Institute on Taxation and Economic Policy and Citizens for Tax Justice found what they call numerous tax dodgers when analyzing returns between 2008 and 2010 from all 50 states.

Averaging the past three years, Healthcare Information Technology firm McKesson actually received a 1.5 percent refund from state income taxes. Marketer Core-Mark Holding was also in negative territory, at negative 1 percent. Silicon Valley giant Intel paid no state income taxes.

All were profitable in each of those years.

"Basically the system is kind of rigged for corporations to have it easier than people," Occupy Sacramento protester Cesar Aguirre said. "So I'm really not surprised at these numbers. But it's really good to have some evidence."

The Institute for Research on Labor and Employments says when corporations pay no or low taxes, there's not enough money to support schools and other government services. The result? Budget cuts and maybe more budget cuts after that.

"This is because we don't have the funds necessary to run this state, so it's extremely important to get the tax base that's due here in California where these companies are able to make these very healthy profits," UC Berkeley Economist Sylvia Allegretto said.

It's important to point out no company is being accused of any wrongdoing. The report says corporations get a lot of help avoiding their tax responsibilities from accounting firms, lobbyists and state lawmakers.

Assm. Roger Dickinson, D-Sacramento, headed a hearing on wealth inequality this week and acknowledges government's role in fostering corporate tax breaks and loopholes, especially when jobs are promised in return.

"I think it's a fair criticism, both at the state and national level," he said. "Over the past decades, we have tended to be much more responsive to those who have influence, who have economic resources and often times at the expense of those vulnerable among us."

Meanwhile there are still more than 2 million Californians out of work, a number that hasn't budged much during the tax period studied.

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