Dozens of America’s largest and most profitable corporations paid little or no state income taxes during a recent three-year period, according to a new report by the Institute on Taxation and Economic Policy.
The report found that some of America’s largest corporations paid state taxes on 3 percent of their total profits. But state income tax rates average 6.2 percent, meaning these companies escaped paying taxes on more than half their profits from 2008 through 2010.
Some large companies, including DuPont, Intel and International Paper, paid no state income taxes at all during the three-year period.
“The data in this report show in stark terms just how successful large, multistate corporations have become at shirking their responsibilities to state and local governments,” the authors conclude. “They have been abetted in this effort by America’s major accounting firms, used heavy lobbying and even threats, and often persuaded state elected officials to be their facilitators.”
Two Louisiana-headquartered multistate firms were included in the report: New Orleans-based Entergy, which paid state income taxes equal to 1 percent of its $5.6 billion in reported profits during the three-year period; and Monroe-based CenturyLink, which paid taxes on 1.8 percent of its $2.9 billion in total profits over the same time frame.
Louisiana’s corporate tax rate ranges from 4 percent to 8 percent, depending on profits.
The report also highlights policies that Louisiana and other states could enact to make sure that corporations pay their fair share in state taxes. One policy is combined reporting, which would close tax loopholes and help level the playing field between large, multistate corporations and in-state businesses, as the Louisiana Budget Project explained in a paper last year.
The report looked at 265 Fortune 500 companies that reported profits each of the last three years, and whose public filings provided enough information to calculate their domestic profit and the amount paid in state income taxes.
It’s impossible to determine how much companies paid in specific states, as companies don’t disclose profits and taxes paid on a state-by-state basis.