Sixty-eight of the most consistently profitable Fortune 500 companies paid no state corporate income tax in at least one of the last three years, and 20 of the companies averaged a tax rate of zero or less from 2008-2010.
Nevertheless, the companies told shareholders they made nearly $117 billion in pre-tax U.S. profits during those no-tax years, and 16 of the companies had multiple no-tax years.
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Some companies, such as DuPont, Goodrich, International Paper and Intel, paid no net state income tax over the full three-year period. Among the 20 corporations who paid zero or less in state corporate income taxes over the three-year period were utility provider Pepco Holdings, pharmaceutical giant Baxter International, and fast food provider Yum Brands.
Of the 280 profitable Fortune 500 corporations included in an earlier study from the two groups last month on corporate tax avoidance at the federal level, 265 fully disclosed their state and local income tax payments (see
Since the average statutory state corporate tax rate is about 6.2 percent (weighted by gross state product), that means that over this period, about half of their profits escaped state taxes entirely.
“Our report shows these 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.”
In 2009 alone, 32 companies paid no state income tax. Another 105 of the companies paid less than half the weighted-average statutory state corporate tax rate that year, meaning that fully one half of the companies in the sample paid less than half the average state tax rate.