US report sparks corporate tax row

Most US corporations and foreign businesses doing business in the US paid no
federal income taxes, a
report by the US’s Government
Accountability Office
has found.

A smaller proportion of larger companies, around a quarter, paid no federal
income taxes, the report said.

The report has sparked a debate in America, similar to that which followed an
NAO report in the UK detailing the number of large companies paying little or no
tax, about whether or not there is widespread corporate tax avoidance.

In a statement, senator Byron Dorgan called the report ‘a shocking indictment
of the current tax system’. Senator Carl Levin said it made clear that ‘too many
corporations are using tax trickery to send their profits overseas and avoid
paying their fair share in the United States,’

Economists at the
Tax Foundation
said that the report had been misread by some, and that there
were good reasons why some companies were not paying tax. ‘For example, in a ”
clever tax dodge”, American Airlines avoided income tax for 2005 by losing $862
million. General Motors lost $10.5 billion in 2005; I bet those greedy fat cats
didn’t pay any corporate income tax, either,’ Josh Barro from the Foundation

Further Reading:

Read the GAO report

the Reuters report

News: Do US companies really pay no taxes?

Related reading