The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

To sign-up to receive the CSR Newsletters regularly during the fall and spring academic semesters, e-mail author David Chandler at david.chandler@ucdenver.edu


Monday, November 4, 2013

Strategic CSR - Corporate Tax

The article in the url below captures concisely the issue with corporate tax in the U.S. The system is unwieldy and the rate is high; as a result, corporations seek to avoid it. The results can be quite stark:
 
“Taxes paid by profitable companies in the United States are often less than half the statutory 35% tax rate, according to a new study released on Monday by the U.S. Government Accountability Office.”
 
As indicated by the article’s title, five numbers, in particular, emphasize the disconnect between profits made and taxes paid:
 
17.4% – Including state and local taxes, this was the average effective tax rate for profitable companies with at least $10 million in revenues in 2010.”
 
$242 billion – This is the amount of corporate income taxes the GAO says was paid in 2012 … . That figure compares to $845 billion collected in social insurance taxes and $1.1 trillion collected in individual income taxes.”
 
$1.1 trillion – In 2010, profitable companies reported an aggregate $1.4 trillion in pre-tax profits, while unprofitable companies reported losses of $315 billion, resulting in a net pre-tax income of $1.1 trillion for all corporations.”
 
16.9% – The effective tax rate for profitable companies has … declined to 16.9% in 2010 from 20.8% in 2008.”
 
I particularly like the last number:
 
$762 billion – Companies sometimes report different figures to the Internal Revenue Service than they do to investors. When accounting for transactions between corporate units on their tax returns, companies made adjustments in their favor to the tune of $762 billion compared to their 2010 financial statements, and negative adjustments of just $20 billion.”
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
Five Numbers Show How Much Corporations Really Pay in Taxes
By Emily Chasan
July 1, 2013
The Wall Street Journal