Americans think that corporations don’t pay enough in taxes. A recent survey by the Pew Research Center found that 64% of people were bothered by the idea that big businesses weren’t paying their fair share to the IRS.
Taxpayers have reason to be concerned about corporate tax dodging, according to a report from Citizens for Tax Justice (CTJ). Fifteen companies in a range of industries, including General Electric, CBS, Prudential, and Mattel paid virtually nothing in income taxes in 2014, despite generating U.S. profits of roughly $23 billion, the CTJ found.
A number of companies actually had negative tax burdens. In other words, they received money back from the federal government, sometimes hundreds of millions of dollars. CBS got a tax rebate of $235 million. PEPCO Holdings received $137 million. Prudential Financial got $106 million.
How do corporations end up paying less income tax than ordinary Americans? The answer lies in the byzantine U.S. tax code, which is chock full of potential deductions, credits, and other perfectly legally tricks that let huge companies completely eliminate their tax burden.
Some people think corporations should have to pay more. “[W]e need a tax system that demands that large, profitable corporations and the wealthy start paying their fair share in taxes,” said Rep. Bernie Sanders (I-Vt.) in a statement.
Corporate America and its supporters in Washington feel differently. When Congressional Republicans backed a $287 billion package of corporate tax breaks in July 2014, House Speaker John Boehner (R-Ohio) defended it by saying that it would “put more Americans back to work,” CNN reported.
Pro or con, big corporate tax breaks don’t look to be going anywhere in the immediate future. Here are four of the biggest strategies corporations use to shrink their tax bills, according to the CTJ.