Large, profitable American corporations paid only 14 percent of their profits in federal income taxes on average from 2008 through 2012, and approximately one-fifth of them paid nothing at all in each of those years, according to a new government report commissioned by Sen. Bernie Sanders.

In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability, although larger corporations were more likely to owe tax, according to the report.

The report, from the Government Accountability Office, found that among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012.

Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. The reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.

Sen. Bernie Sanders, D-Vt., the ranking Democrat on the Senate Budget Committee, who is facing off against Hillary Clinton in next week’s Democratic primary, requested the report from the GAO. On the campaign trail, Sanders has been calling for steep tax increases on large corporations and the wealthy.

“There is something profoundly wrong in America when one out of five profitable corporations pay nothing in federal income taxes,” Sanders said in commenting on the report. “Large corporations cannot continue to get more tax breaks when children in America go hungry. We need real tax reform to ensure that the most profitable corporations in America pay their fair share in taxes. That means closing corporate tax loopholes to raise the revenue necessary to rebuild America and create millions of jobs.”

Last year, Sanders, Sen. Brian Schatz, D-Hawaii, and Rep. Jan Schakowsky, D-Ill., introduced the Corporate Tax Dodging Prevention Act to prevent profitable corporations from receiving tax breaks by sheltering income in Panama, the Cayman Islands, Bermuda and other offshore tax havens.

According to a 2015 report by Citizens for Tax Justice, most Fortune 500 corporations have established offshore subsidiaries.

The percentage of large, profitable American corporations that paid nothing at all in each of the years studied by the GAO ranged from 17.9 percent in 2008 to 24.1 percent in 2011.

Large corporations use a variety of deductions to pay far less than the federal corporate income tax rate of 35 percent, including maneuvers that shift profits overseas, Sanders noted. “Corporate greed is destroying the fabric of America,” he said. “It must come to an end.”

Congress and the Obama administration have expressed interest in reforming the U.S. corporate income tax and the rate at which U.S. corporations' income is taxed, the GAO noted. Currently, the top statutory corporate income tax rate is 35 percent. The GAO's 2013 report on corporate effective tax rates, or ETRs, found that in tax year 2010, whether for all large corporate filers or only profitable ones, the average ETRs were significantly below the statutory rate.

These reasons also explain why corporate ETRS can differ substantially from statutory tax rates, according to the GAO. ETRs attempt to measure taxes paid as a proportion of economic income, while statutory rates indicate the amount of tax liability (before any credits) relative to taxable income, which is defined by tax law and reflects tax benefits built into the law. The statutory tax rate on net corporate income ranges from 15 to 35 percent, depending on the amount of income earned. For tax years 2008 to 2012, profitable large U.S. corporations paid, on average, U.S. federal income taxes amounting to about 14 percent of the pretax net income that they reported in their financial statements (for those entities included in their tax returns).

When foreign and state and local income taxes are included, the average ETR across all of those years increases to just over 22 percent. The GAO also computed ETRs that combine large profitable corporations and those large corporations with current year losses, which pay little if any actual tax.

Over tax years 2008 to 2012, all large corporations—profitable and those that reported current year losses—paid 25.9 percent of their pretax net income in U.S. federal income taxes, and 40.1 percent when foreign and state and local taxes are included. Including corporations with losses results in a more comprehensive estimate, but makes the results difficult to interpret because ETR is not meaningful for a corporation in a year in which it has a net loss.

The GAO said it could not examine the variation in ETRs across corporations with the aggregated data available, although the GAO's prior work suggests that ETRs are likely to vary considerably.

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