WASHINGTON -- With imagination and a little help from their friends in Congress, some of America's largest companies are again paying substantially less than the maximum federal income tax rate -- sometimes nothing or less than nothing, according to a study released Thursday.
According to the report, 41 companies not only owed no tax, but received money back in at least one of the three years studied -- 1996-98 -- although they reported a total of $25.8 billion in pre-tax profits. "They made more money after taxes than before taxes," said Robert McIntyre, the principal author.
McIntyre, head of the Citizens for Tax Justice, did similar studies on corporate taxes in the 1980s. Those studies were part of the background that led to inclusion of an alternative minimum tax on corporations in the tax reform act of 1986.
His new report, released by the Institute on Taxation and Economic Policy, was sponsored by the Ford Foundation and other philanthropies. It found 24 companies -- nearly one in 10 studied -- received tax rebates in 1998 alone, including such household names as Texaco, Chevron, Pepsico, Goodyear, and General Motors.
Texaco, for example, received a tax rebate of $67.7 million so that it paid a taxes at a rate of negative 37.2 percent on the $182 million in profits it reported in 1998.
The maximum corporate tax rate is 35 percent.
In dollar terms, the study found that tax breaks enabled the companies to reduce their taxes by $98 billion over the three years, with 25 companies receiving almost half of that amount. General Electric topped the list, with $6.9 billion in breaks, which cut its tax bill by 77 percent over the three years.
Several of the companies said Thursday that they had done nothing wrong, and were engaging in businesses that Congress intended to encourage. Some disputed the report's figures.
A Texaco spokesman, for example, called the report "a little bit misleading" because the rebates it cited were actually refunds related "to overpayment of federal taxes in previous years."
A GE spokesman also questioned the report's methodology, noting that of the $6.9 billion in breaks cited, $2.4 billion was deferred taxes "that we will pay."
McIntyre said the findings suggest that big companies have succeeded in recovering much of the ground lost to federal revenue collectors since the 1986 tax bill. That law eliminated or restricted a number of commonly used writeoffs and imposed the Alternative Minimum Tax to prevent corporations from eliminating their tax burden altogether.
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