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Companies with billions in profits pay no income tax
RACINE -- Most people think taxes are as certain as death, but a local consumer group says that’s not the case for the wealthy and the well-connected, including corporations that make billions and pay less than many individual Americans for income tax.
Money has been flowing to SC Johnson for more than a hundred years, making the Racine-based company nearly as famous as its products, like Pledge and Windex.
But lately the family business is getting a reputation for cleaning up when it comes to taxes.
The Institute for Wisconsin's Future says the company paid no state income tax for nine years, though sales exceed $8 billion each year.
"That’s kind of disturbing,” said Vic Fowler.
SC Johnson released a statement saying it "has not owed state income taxes for a number of years... due to... business losses and credits.”
But in 2008 an accounting firm published a report, called "hypothetical" by the company, showing $155 million of "taxable income."
“It kind of sounds like a double standard - the little guy has to pay and the big guy doesn't. It's not right,” said Jeff Frane.
Bruce Speight, state director of Wisconsin Public Interest Research Group (WISPIRG), agrees.
He says too many companies are raking in big bucks and shelling out little to nothing for taxes.
“We’ve got companies that, because they can afford an army of tax lawyers, get out of paying their fair share,” explained Speight.
WISPIRG released a report explaining how companies like Goldman Sachs and General Electric transfer earnings to small countries with very low tax rates.
"They aren't doing anything illegal, but that doesn't make it okay,” he noted.
Speight says corporations use such “offshore tax havens” to avoid paying U.S. taxes.
He says every Wisconsin resident has to kick in an average of $370 extra a year to make up for it.
The WISPIRG report says General Electric used that loophole to get out of paying federal income taxes, despite $4 billion in U.S. profits, in 2010.
“I don't understand it. How are we going to change it?" wondered Fowler.
“The Stop Tax Haven Abuse Act, which would require more open and honest reporting by companies,” explained Speight.
General Electric released a statement saying the company “did pay U.S. federal income tax for 2010” but would not say how much.
All the companies contacted by CBS 58 for this story refused to release their tax returns.
That’s why groups like Citizens for Tax Justice study Department of Revenue statistics and corporate shareholder documents.
The group said out of 12 major corporations, Yahoo, Dupont, Boeing and Verizon paid no federal income tax in 2010, although each pulled in profits ranging from $855 million to $11 billion that same year.
The study also said in 2009, Exxon and Wells Fargo avoided corporate tax, though the oil giant guzzled up $2 billion and the bank collected $21 billion in profits.
“It’s a matter of fairness and a matter of making sure that the services all of us benefit from, we're all chipping in to pay for,” insisted Speight.
Companies like Boeing told CBS 58 it is perfectly legal to write off their investments, like buying equipment and hiring workers.
But none of the companies denied paying less than the 35% corporate tax rate or denied paying a lower income tax rate than many of their employees cough up out of every paycheck.
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