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A comprehensive new study by the Institute on Taxation and Economic Policy (ITEP) found that Insight Enterprises, headquartered in Arizona, paid only 0.9% in income taxes from 2008-2010. In 2009 Insight had an income tax rate of -1.6%, meaning that Insight received net tax payouts from Arizona. The report profiles 265 consistently profitable Fortune 500 companies – including Insight Enterprises, PetSmart, and Apollo Group, which are headquartered in Arizona – and how much they paid in state income taxes.
“Individual taxpayers and small businesses in Arizona end up having to pick up the tab when corporations avoid paying their fair share of taxes,” said Serena Unrein, Public Interest Advocate for the Arizona PIRG Education Fund.
The report, “Corporate Tax Dodging in the Fifty States, 2008-2010” was produced by ITEP and released today in conjunction with the Arizona PIRG Education Fund. It examines total state taxes paid each year from 2008-2010 by Fortune 500 companies that reported profits all three years.
“Our report shows these 265 corporations raked in a combined $1.33 trillion in profits in the last three years, and far too many have managed to shelter half or more of their profits from state taxes,” said Matthew Gardner, Executive Director at the Institute on Taxation and Economic Policy and the report’s co-author. “They’re so busy avoiding taxes, it’s no wonder they’re not creating any new jobs.”
“Corporate Tax Dodging in the Fifty States, 2008-2010” concludes that these 265 corporations paid $42.7 billion less in the last three years than expected based on the weighted average of state’s statutory tax rates. Corporations have been able to avoid taxes for a variety of reasons: state lawmakers have enacted a variety of tax subsidies that reduce tax bills, federal tax breaks enacted in the past decade have further reduced state corporate income tax revenues since states generally accept corporations’ federal tax numbers as their basis for calculating taxable income; and multi-state corporations have also become more aggressive at devising tax-avoidance schemes.
“Companies should thrive based on how productive and innovative they are, not based on the aggressiveness of their lobbyists and lawyers,” said Unrein.
The Arizona PIRG Education Fund’s study last year on the use of offshore tax havens found that household tax filers in Arizona pay on average $293 in additional federal taxes to make up for revenue lost due to use of offshore tax havens. That report, Tax Shell Game: How Much Did Offshore Tax Havens Cost You in 2010, can be found at this link.
Because few states have transparency regarding business taxes, it is not possible to determine specific tax amounts paid by corporations to individual states. All figures in ITEP’s report “Corporate Tax Dodging in the Fifty States, 2008-2010” are aggregate for taxes paid to all U.S. states by each corporation.
“Corporations should be required to publicly report their in-state profits, as well as any subsidies or loopholes they are exploiting each year,” concluded Unrein. “Arizonans deserve the facts; we need to know what revenue our state is losing because of corporate tax dodging.”
The new ITEP study is online at http://www.ctj.org/corporatetaxdodgers50states/.
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