Today the Corporate Observer welcomes Gouri Bhat, a Partner in Berk Law’s Austin, TX office, who addresses corporate tax avoidance – a discussion notably missing from our mainstream media. Please enjoy.
The chasm between the individual and the corporation is never bigger than during tax season. As millions of average, procrastinating Americans like me – individuals, households, small business owners – put the final touches on their income tax returns, thrilled to discover that they may be getting a small refund ($500 this year!) or at least don’t owe any money, it’s always shocking to be reminded that the largest, most profitable U.S. corporations somehow manage to completely avoid paying taxes. Their refunds are a lot bigger than mine, too. How do they do it?
Just a few examples: In 2009, after receiving almost $1 trillion in bailout money from taxpayers , Bank of America made $4.4 billion in profits, and then received a $1.9 billion tax refund. Exxon Mobil made $19 billion in profits, and then took home a $156 million rebate from the IRS. And most notoriously, General Electric – the nation’s largest corporation and most aggressively creative tax-avoider – reported $14.2 billion in profits in 2009 ($5.1 billion from its U.S. operations), but still claimed a $3.2 billion tax benefit. And the list goes on.
With all the furor over the Bush tax cuts on the wealthiest households (“to renew or not to renew”), corporate tax reform is much less discussed in mainstream media. Some estimates are that by simplifying the maze of tax loopholes and ending the abusive use of offshore tax shelters, the federal government could raise more than $400 billion in the next decade. That would make for a pretty good start on deficit reduction.
Guest post by Gouri Bhat.