Corporate Governance

Tax Liability Is Optional for Corporations

By Fei-Lu Qian

At the request of two senators, Carl Levin of Michigan and Byron L. Dorgan of North Dakota, the Government Accountability Office, the investigative arm of Congress, issued a report finding that two out of every three U.S. corporations paid no federal income taxes between 1998 and 2005. The study covered 1.3 million corporations of various sizes including foreign-owned and domestic ones. Specifically, 68% of foreign corporations and 66% of domestic corporations did not pay taxes during the above period. Moreover, in 2005 alone, one in four domestic corporations with assets of at least $250 million ?paid no taxes on revenue of $1.1 trillion, compared with 66% in the overall pool.? What is even more shocking is that at least 23% of domestic companies just don?t pay federal income taxes in any given year. Without providing solid explanations why so many companies reported no tax liability, the report notes that many domestic companies clean their tax liability by deducting from their taxable profits the losses incurred in previous years.

See article here.

Full post as published by PomTalk on August 13, 2008 (boomark / email).