Most Corps. Paid No U.S. Taxes in Late 90s
WASHINGTON, April 1-
Most American and foreign corporations operating in the United
States paid no income tax between 1996 and 2000, government auditors
Using data collected by the Internal Revenue Service (news - web
sites), the auditors found that 71 percent of foreign corporations
paid no federal income tax. During the same time, 61 percent of
American corporations paid no income tax.
Among the largest corporations, American businesses were more
likely to avoid taxation than foreign businesses.
The study was done by the General Accounting Office (news - web
sites), the investigative arm of Congress.
Investigators also looked at companies that paid less than 5 percent
of their total income in tax.
In 2000, the most recent year for which data was available, an
estimated 94 percent of American corporations and 89 percent of
foreign corporations paid less than 5 percent of their total incomes
The two Democratic senators who asked the GAO to study corporate
taxation said the results expose gaping loopholes in the tax system.
"They don't pay their fair share, and the net result is that
average taxpayers working families wind up paying
more to make up that difference," said Sen. Byron Dorgan,
D-N.D. "That's not fair or right."
Companies might not pay taxes in a year because they lose money
or carry forward operating losses from previous years. New companies
often owe no tax because their expenses are higher than those
of more mature companies.
Researchers also found that companies improperly reduce or eliminate
their tax liabilities by fallaciously pricing transactions among
subsidiaries in different countries.
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