DFL U.S. Rep. Keith Ellison isn’t too happy about a deal to keep the government funded through September.
In an April 11, 2011 interview on MPR News, Ellison said that the 11th-hour compromise relies too much on spending cuts and not enough on revenue.
“The problem is not that we need to cut, cut, cut, the problem is that we have two-thirds of all American corporations that don’t pay any taxes,” he said.
Ellison is on solid ground with his claim.
Ellison points to a 2008 Government Accountability Office report to support his claim. The study, which looked at corporate income taxes paid between 1998 and 2005, appears to be the most recent analysis of the issue.
According to the report, about 66 percent of all United States corporations didn’t pay any income tax in 2005, the last year included in the study. That percentage didn’t change much between 1998 and 2004. It’s important to point out that only 3 percent of all the firms reported no income taxes in every year examined in the study.
There are plenty of reasons why a business doesn’t report corporate income tax. For instance, some may have had an operating loss in previous years, and newer operations may not be making enough to be taxed.
Ellison is correct: based on the most recent data, roughly two-thirds of all U.S. corporations don’t pay income taxes.
Minnesota Public Radio News, Midmorning, April 11, 2011
The Government Accountability Office, Comparison of the Reported Tax Liabilities of Foreign- and U.S.-Controlled Corporations, 1998-2005, July 2008
Associated Press, Most Companies Pay No Federal Income Tax, Aug. 12, 2008
Tax Policy Center, Boring Report Prompts Sensational Claims on Corporate Tax Avoidance, by Eric Toder, Aug. 20, 2008
Interview, Micah Clemens, spokesman, Rep. Keith Ellison, April 11, 2011
Interview, James White, Government Accountability Office, April 12, 2011
Interview, Eric Toder, Urban Institute, April 12, 2011
Interview, Alan Viard, American Enterprise Institute, April 12, 2011
Interview, Chuck Marr, the Center for Budget and Policy Priorities, April 12, 2011
The Humphrey School