Are Corporations Paying Tax?
A recent federal report shows that approximately 66 percent of foreign-owned and domestic corporations failed to pay U.S. corporate income taxes in 2005. With 1.9 million U.S. corporations out there, you can only imagine how much money was not paid in taxes.
“In 2005, nearly 67 percent of 1.9 million U.S. corporations paid no federal income tax.
Of those, 3,500 were considered large corporations. Large corporations, with at least $250 million in assets or at least $50 million in receipts, account for more than 90 percent of corporate assets, the study said.
Also in 2005, about 65 percent of 59,000 foreign-owned corporations reported no tax liability.
Corporations can legally avoid tax liability by reporting no income or no net income after expenses, the report and tax analysts said.”
While this may appear to be a big problem, these corporations are not doing anything wrong. Instead, what they are doing is legal. They are simply taking advantage of what the tax laws allow them to do. Those who are familiar with tax codes are well aware that there is a large gap between the money that a corporation earns and the amount of income that they need to pay tax on.
Many argue that reports like this should lead to a change in corporate tax laws. And while this may happen in the future, for now there are hundreds of thousands of corporations taking advantage of what the law and tax codes offer.
