Are You Paying For Corporate Fat Cats?

As you file your tax return this week, you may think you’re paying off the tax obligations for just your household. But you’re also footing the bill for American companies that are dodging billions of dollars in taxes. “Most major corporations have a tax department not just to comply with the tax code but also as a profit center,” says Charles Cray of the Center for Corporate Policy, a nonprofit watchdog group.

A 2004 U.S. Government Accountability Office (GAO) study found that 61% of American corporations, including 39% of large companies, paid no corporate income taxes between 1996 and 2000. Last year, corporations shouldered just 14.4% of the total U.S. tax burden, compared with about 50% in 1940.

While companies are getting off easy, thanks to loopholes, ordinary wage earners are getting stuck with the tab. The tax burden on individuals is expected to climb from $1.16 trillion in 2007 to $1.21 trillion this year, according to the Congressional Budget Office (CBO), while corporate tax receipts are expected to decline from $370 billion to $364 billion. By 2013, the CBO estimates, ordinary taxpayers’ bills may climb to $1.86 trillion while corporate tax bills drop to $327 billion. More...