Huge Companies Aren’t Really Paying Huge Taxes

It turns out big corporations are not paying as much as they ought to pay on taxes. Corporations are expected to pay as much as 35% on federal income tax, but congress investigation reveals that large companies pay less than half of that amount on the average.

The Government Accountability Office recounted that these companies paid 12.6% in 2010. Ironically, these companies are also seeking cuts on corporate tax. This report came out during the time when the government was keeping budgets tight and their increased awareness regarding clever tax cutting tactics of corporations.

According to Senator Carl Levin, American companies are frequently complaining about the 35% top tax rate, but they barely pay as much. In fact, they barely pay close to that amount. The Michigan Democrat knows the top tax rate is one of the highest in the world. In May, he issued a report that specifies the tax avoidance of Apple Inc. Note that he also looked into the low taxes of Microsoft.

The GAO report did not reveal companies that pay only a third of the top rate. However, there seems a trend of paying lower taxes. Earlier reports indicated companies paying between 20 and 30 percent in taxes. New IRS data and public financial statements exposed that profitable corporations are not really meeting top tax rates.

President Obama, together with some legislators, has advocated lower taxes for corporations.

A report published by GAO in April indicates a rise in annual cost of breaks on corporate taxes. It has risen more than twice since 1987, reaching 180 billion dollars.