Study: Many Major U.S. Corporations Pay Less in Taxes Than the Average Marylander
9/22/2004 1:05:00 PM
To: State Desk
Contact: Bob McIntyre of CTJ/ITEP, 202-626-3780; Steve Hill of the Maryland Budget and Tax Policy Institute, 301-565-0505; Web:
http://www.marylandpolicy.orgSILVER SPRING, Md., Sept. 22 /U.S. Newswire/ -- Many of the nations largest, most profitable companies are paying little or no federal income taxes, according to a study released today by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP). Among the major Maryland-base corporations included in the study were Constellation Energy and Marriott. From 2001 to 2003, the study estimates that Constellation had an effective federal income tax rate of 19.7 percent--well below the statutory 35 percent tax rate. Marriott's effective tax rate over the same period was 1.7 percent.
The CTJ/ITEP study examined federal income taxes paid by 275 of the country's largest, most profitable companies and found that the overall effective tax rate on these companies between 2001 and 2003 was 18.4 percent, nearly half the statutory 35 percent rate.
Nearly a third of the companies paid zero taxes or received a rebate in at least one year between 2001 and 2003. For example, Maryland-base Marriott reported earnings of $383 million in 2003, yet received a federal tax rebate of $38 million, for an effective corporate income tax rate of -10 percent.
Similarly, over the three-year period Pepco Holdings reported earnings of $725 million, yet received federal corporate income tax rebates of $432 million, for an effective corporate income tax rate of -60 percent.
"With significant help from Congress, corporations appear to be finding their way around the tax reforms adopted in 1986," said ITEP Director Robert S. McIntyre. "We hope that our findings will encourage lawmakers to reexamine this important area of taxation."
"The data indicate that in 2003, the average American taxpayer paid more in federal income taxes than AT&T, Time Warner, and Disney combined," said Steve Hill of the Maryland Budget and Tax Policy Institute, a local think tank that has examined state corporate tax issues. Together, those companies earned $8.7 billion, but received an estimated $543 million in federal tax rebates.
"These finding have significant impact on Maryland tax collections. The federal tax code is the starting point for determining state corporate income tax payments. If companies can successfully dodge paying taxes at the federal level, then avoiding income taxes at the state level is a slam dunk," said Hill.
According to Hill, the findings suggest that Maryland needs to explore ways to negate the impact of federal tax avoidance on state tax collections.
The CTJ/ITEP study is available at
http://www.ctj.org/corpfed04pr.pdf.http://releases.usnewswire.com/GetRelease.asp?id=36705(edited for title length)
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