U.S. tax loopholes allow some highly profitable companies to skate

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The U.S. corporate tax code just became the biggest sidebar under jobs for the national election campaign.

It should be clear to one and all that large corporations have not begun to participate in hiring to any significant degree and are, in fact, far short of getting back to pre-recession levels.

Small businesses, in a recent month, added 167,000 jobs to the economy, while those with more than 500 workers added a mere 3,000 jobs -- despite their jingoistic, "we're on board with the recovery" Super Bowl advertising.

In the background, President Obama has pledged significant export growth, a promise that seems to be going the other way with the trade deficit expanding to $558 billion in 2011, up $58 billion from 2010, the U.S. Census Bureau reported in February.

It's true, exports grew, but what's the point if imports outpace export expansion?

Meanwhile, it is also common knowledge that it would take Alexander the Great to cut through the tangled U.S. tax code that has dozens of profitable companies paying no federal taxes.

In a recent report, Citizens for Tax Justice and the Institute on Taxation and Economic Policy said of 280 U.S. companies studied, 78 paid no federal tax in at least one of the past three years.

In very basic math, that would mean 29 out of 280 or 10 percent of U.S. corporations -- given the study found a representational group -- do not pay taxes in any given year.

That said, there are 3,146 companies listed on the New York Stock Exchange and an additional 2,665 listed on the Nasdaq index. Some 484 others are listed on the Amex index. And, of course, privately held firms, and there are many, are not listed at all.

Generalizing for a moment, out of 6,295 firms, 10 percent or 629 do not pay taxes each year.

In the report, 30 of the companies that posted profits of $160 billion during the three-year study period had negative tax bills. Those guys got rebates.

In the study, the corporate tax rate, which the president will propose should be 28 percent with fewer loopholes -- rather than a 35 percent mess -- had an effective tax rate of 18.5 percent.

"These 280 corporations received a total of nearly $223 billion in tax subsidies," said the report's lead author, Robert McIntyre, director at Citizens for Tax Justice.

The Raw Story reported Wells Fargo & Co. was No. 1 on the list of tax dodgers, getting about $18 billion in tax breaks in the three-year study period.

Put in perspective, in a three-year stretch one U.S. company received tax breaks that came to 43 percent of the budget gaps of every state budget in the union.

In international markets Wednesday, the Nikkei 225 index in Japan rose 0.96 percent while the Shanghai composite index in China rose 0.93 percent. The Hang Seng index in Hong Kong gained 0.33 percent while the Sensex in India dropped 1.54 percent.

The S&P/ASX 200 in Australia was flat, up 0.04 percent.

In midday trading in Europe, the FTSE 100 index in Britain lost 0.32 percent while the DAX 30 in Germany slid 0.6 percent. The CAC 40 in France gave up 0.38 percent while the Stoxx Europe 600 lost 0.75 percent.