Tax day came and went this week, resulting in a collective moan about writing a check to Uncle Sam. Want to minimize your tax burden next year? Here's a possible solution. Turn yourself into a corporation. You may have to pay no taxes at all!
That looks like decent strategy in light of a new report. It shows how, among Fortune 500 companies, 111 paid no federal corporate tax in one of the last five years. And that some—including Boeing, General Electric, Priceline.com, and Verizon—had a negative tax rate over the period (the government actually gave them money) despite combined profits of $170 billion.
The report, from Citizens for Tax Justice and the Institute on Taxation and Economic Policy, looked at filings of 288 profitable companies. On average, they paid an effective rate of 19.4% between 2008 and 2012 (the actual rate should be closer to 35%). Many multinationals paid out more abroad than they did in the U.S.
Tax breaks partly explain the low numbers. The 288 companies got total subsidies worth $362 billion over the period. Wells Fargo did best, receiving $21 billion from the U.S. Treasury. Pepco Holdings, which owns various energy companies, had the lowest effective rate of all, negative 33%.
To see how much a corporation pays, you can use CTJ's Corporate Tax Explorer tool. Just plug in a name and see all the details. Then look at your own tax form. As a smart person once said: "Only the little people pay taxes."
[Image: Scrooge McDuck]