Federal Taxes Not So Inevitable For Two-Thirds Of U.S. Corporations

Death and taxes are said to be the only certainties in this world, but for 1.2 million U.S. companies, and over 38,000 foreign companies doing business in the fifty states, the federal income tax bill for 2005 was zero. That's according to a General Accounting Office study which says the combined sales of the companies was $2.5 trillion dollars. About a quarter of the U.S. corporations on the list have at least $250 million in assets or $50 million in receipts.

The GAO report further notes that between 1998 and 2005, no federal taxes were paid by two-thirds of U.S. corporations and 68 percent of foreign corporations doing business in this country. "It's shameful that so many corporations make big profits and pay nothing to support our country," Sen. Byron Dorgan told The Associated Press, commenting on the report which was done at the request of Dorgan and Sen. Carl Levin. "It's time for the big corporations to pay their fair share."

There are many reasons a company might not pay corporate income taxes – many of them, including tax credits and losing lots of money, are quite legal. For some companies, income taxes are being paid – just not corporate tax. Chris Edwards, a tax expert at the libertarian Cato Institute, tells the AP that an increasing number of so-called limited liability and "S" corporations pay their due to Uncle Sam in the form of individual income taxes - which account for 43 percent of overall federal revenue. Corporate income taxes weigh in at just under 15 percent of total federal revenue.

Gallup polls have found that opinions on federal income taxes – too high? too low? fair? unfair? – have differed little according to the income of survey participants. An April poll found 52 percent said their taxes are "too high," 42 percent judged their tax bill as "about right," and 2 percent said their bills were "too low." Sixty percent judged the amount they pay as "fair" and 35 percent said "not fair." Sixty-three percent said upper-income people pay too little, and 51 percent said lower-income people pay too much.

Taxes have been a hot issue in this campaign year - from estate taxes and gas taxes to capital gains and income tax – the latest being a proposal by Democratic presidential candidate Barack Obama, who has drawn some criticism for suggesting that senior citizens earning under $50,000 should not be required to pay income taxes.

For more on the candidates and their tax plans, check out the John McCain and Obama websites and some side-by-side comparisons of their proposals, on two non-partisan web sites: the Tax Foundation and the Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute. And for more on the impact of tax proposals on the still burgeoning federal budget deficit – another hot topic this year – check out FacingUp.org, Students Face Up To The Nation's Finances, and Budget Hero, an online game in which you get to try your own hand at balancing the budget.