You are hereAlterNet: 10 of the Biggest Corporate Tax Cheats In America

AlterNet: 10 of the Biggest Corporate Tax Cheats In America

April 5, 2011- If you or I were running a small business and we kept one set of books showing how much money we were making and a second set for the IRS that painted a picture of an enterprise on the brink of bankruptcy, we'd end up behind bars.

But that's standard operating procedure for corporate America. In fact, public corporations have to do it -- the law requires that they keep one set of books for their shareholders, and another for the IRS. As tax journalist David Cay Johnston explained, "Many corporations routinely tell investors they incur millions in corporate income taxes, while the financial records they give the IRS show they owe nothing or are due refunds."

In the records kept by the IRS, corporations cook the books "by using tax shelters, offsetting income with losses from years ago, and employing countless other devices that make them look like paupers to the IRS but money machines to investors."We got a peek into this process last week, when the New York Times revealed that multinational giant GE is not only avoiding corporate income taxes this year, but is taking a “tax benefit” of $3 billion. According to the Times, the company's “extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”

But of course, GE is not alone. Here are 10 other big corporate tax evaders (with an assist from an MSNBC analysis of leading corporate tax-dodgers). Keep in mind that neither political party ever actually cuts spending significantly, so every dollar these companies avoid paying is one that will come out of the paychecks of working America.

1. Google

CEO: Eric Schmidt (117 on Forbes list of the wealthiest with a net worth of $6.3 billion in 2010.)

2010 Pre-tax Profit: $10.8 billion

How Google avoids paying US taxes: According to MSNBC, Google reports income in overseas tax havens and then reports its costs here at home. Google also patents its products abroad, licenses its technologies from its overseas subsidiaries and then writes off the costs of the licenses.

Google fun-fact: Google rents 200 goats, complete with goatherd and a border collie, to keep the grass nicely trimmed at Google HQ. Oh, and this week Bloomberg reported that the Federal Trade Commission is considering launching a major investigation into Google's anti-competitive practices.

2. News Corp

CEO: Rupert Murdoch (Murdoch ranked 53rd on Forbes' list of highest-paid CEOs and was the 117th richest person in the world last year.)

2010 Pre-tax Profit: $3.3 billion

Taxation strategy: In 2008, the Government Accountability Office issued an analysis concluding that one of the companies with the greatest number of subsidiaries in offshore tax-havens was none other than News Corp., which then had more than 150 of them scattered across the world.

News Corp. fun-fact: Fox “News” devoted significant airtime to hyping the financial ties between Alwaleed bin Talal, a member of the Saudi royal family, and the developers of the Park 51 Muslim community center planned for downtown Manhattan. Fox implied there was something sinister about the financier, but didn't mention that he is also News Corp.'s second largest shareholder, with 7 percent of the company's stock.

3. Boeing

CEO: W. James McNerney (According to Forbes, McNerney is the 101st most highly compensated CEO, pulling in a cool $58 million over the last five years.)

2010 Pre-tax Profit: $4.5 billion

How Boeing avoid paying US taxes: According to MSNBC, “despite a double-digit tax rate, Boeing has managed to escape paying federal taxes for the last three years thanks to a plethora of foreign subsidiaries, which act as a tax haven. According to Citizens for Tax Justice, the airplane maker paid 0.3 percent of its pre-tax income in federal income taxes in 2010.”

Boeing fun-fact: Boeing may be a defense contractor that's flush with cash, but it reportedly uses prison labor to assemble cable assemblies for the F-15 fighter. At least the jobs are in the US!

4. Pfizer

CEO: Ian Read (Read's new on the job, following the sudden departure of former CEO Jeffrey Kindler late last year.)

2010 Pre-tax Profit: $9.4 billion

How Pfizer avoids paying US taxes: Pfizer uses “transfer pricing” to record phantom profits in low-tax countries based on sales in other countries.

Pfizer fun-fact: The Wall Street Journal, in 2009, noted that “Pfizer agreed to plead guilty to a felony violation 'for misbranding Bextra with the intent to defraud or mislead.' The settlement is the largest in Justice Department history, according to theDOJ’s statement.” It paid $2.3 billion for the fraud.

5. Oracle

CEO: Lawrence Ellison (Forbes ranks Ellison as the 6th richest man in the world, with a fortune worth $28 billion.)

2010 Pre-tax Profit: $8.2 billion

How Oracle avoids paying US taxes: Transfer pricing again, although MSNBC adds that “Oracle suffered a bit last fall when its Japanese subsidiary had to negotiate an advance agreement with tax authorities in the US and Japan so it wouldn’t get hit with transfer price taxes in Japan... Its stock closed 9 percent below the previous day’s close on the Nikkei, the Japanese stock market.

Oracle fun-fact: In 2004, then Attorney General John Ashcroft sued Oracle to block an acquisition on anti-trust grounds. Just three months after he resigned, Ashcroft opened a lobbying shop, Oracle became his biggest client and the right-wing crooner reportedly smoothed the way for its acquisition of Choicepoint, a company made infamous for its part in disenfranchising voters in the 2000 election.



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