Enron's Is Not The Only Free Ride

United States money graphic taxes AP

Enron was America's seventh-largest corporation. But during four of the last five years, the company paid not one dime in federal income taxes.

To many Americans, that in itself is a scandal.

"If it's a big corporation or a rich person, if they avoid paying their fair share of taxes than the rest of us get stuck with the bill," Bob McIntyre, director of Citizens for Tax Justice, told CBS News.

Yet many of America's marquee corporate names pay no federal taxes, reports CBS News Correspondent Mark Strassmann. Some even get millions in tax-rebates.

According to a study by the Citizens for Tax Justice, in 1998, 24 Fortune 500 corporations reported a total of $12 billion in pre-tax profits.

With tax breaks, not only did they avoid the usual 35 percent corporate tax rate — and paid nothing — together they earned another $1.2 billion in tax rebates.

That's a total boon of $5.5 billion, equal to the total 1998 federal taxes paid by everyone living in Montana, Vermont, North Dakota, Wyoming.

Even in pro-business Atlanta, that disparity hits home.

"I think big business ought to pay taxes like the rest of us do," said one resident.

"I pay taxes, and I feel they have a whole lot of money and they can contribute to the country," added another.

General Electric tops the study's list of corporate tax-avoiders, with nearly $7 billion in tax breaks over three years.

"Sometimes I think their most important product is tax avoidance and they make a few refrigerators on the side," said McIntyre.

The numbers are startling, but the tax work is typically legal.

"If I were the man on the street I wouldn't worry," said corporate tax lawyer Pinney Allen. She said the U.S. tax code designs tax breaks to encourage certain corporate behavior, such as when Pfizer invests in research for pharmaceuticals, or Microsoft offers tax options to recruit talented people.

"Just because someone, some company is paying less in tax than somebody else doesn't mean that we necessarily have something heinous going on," added Allen.

Whatever is going on, America's mightiest companies are paying ever less in taxes.

One more repercussion of Enron's fall may be a new call for tax reform.


©MMII CBS Worldwide Inc., All Rights Reserved
  • CBSNews.com staff CBSNews.com staff

Comments

Follow Us

On Twitter