Big spenders on Capitol Hill got big tax breaks

The dome of the U.S. Capitol is seen in Washington Jan. 4, 2011.
AFP/Getty Images
The dome of the U.S. Capitol is seen in Washington Jan. 4, 2011.
AFP/Getty Images
As the economy tanked, some Fortune 500 firms raked in huge profits, all while benefiting from government tax breaks.

The new report is from the left-leaning U.S. Public Interest Research Group and Citizens for Tax Justice. They highlight companies they call "especially aggressive at dodging taxes and lobbying Congress: the Dirty Thirty."

One-third of them are energy companies. Together, between 2008 and 2010, they reported $164 billion in U.S. profits. Yet the report says most paid what amounts to a negative tax rate, meaning they got more in tax rebates than they paid in taxes. And they spent close to half a billion dollars lobbying Congress.

Read the report (PDF)

"The fact that the dirty 30 corporations that we identify here were able to literally spend more money lobbying Congress than they did in taxes really makes a mockery of both our tax code and our democracy," Dan Smith of the Public Interest Research Group said.

One way these big winners avoid taxes, the report says, is by using exotic tax havens that are sometimes nothing more than post office boxes.

The "Ugland House" in the Cayman Islands houses 18,857 "corporations."

Wells Fargo has 58 subsidiaries in tax havens and spent $11 million lobbying Congress between 2008 and 2010. So even with $49 billion in U.S. profits during that same time period, the report says the company paid what amounts to a negative tax rate: receiving more in federal tax breaks than it paid in taxes.

Wells Fargo told us its acquisition of financially distressed Wachovia in 2008 and the related loan losses resulted in an unusual tax period during the years reviewed by this report. "The truth is that over the past 10 years Wells Fargo has paid more than $30 billion in income taxes to federal and state authorities and billions more in other taxes, and it fulfills all tax obligations," said a spokesman. He added that in 2011, "Wells Fargo expects to pay an estimated $4 billion of federal and state income taxes."

Other big names on the list:

  • GE with $10 billion in U.S. profits and $84 million spent on lobbying between 2008 and 2010. The report says its effective tax rate was negative 45 percent. GE said "the report is misleading" but wouldn't elaborate.
  • Pepco with $882 million in profits, $3.8 million spent lobbying between 2008 and 2010. What was its tax rate? The report says: negative 57 percent.

Pepco told us they made use of legal "incentives to invest and stimulate the economy...not loopholes" and they helped "lower overall customer rates."

One of the companies named in the report said on background, "The U.S. tax system needs to be reformed to close loopholes while allowing U.S. companies to compete globally by lowering the corporate rate and providing a territorial system like every other major country in the world."

Fiscally conservative Americans for Prosperity says don't blame the companies -- just the system.

"What we really ought to do is have a rate that's the same for everyone that's fair, that's simple, that's understandable, that doesn't create that incentive for, you know, companies to invest a huge amount of money and time in tax policy instead of in creating value," the group's Phil Kerpen said.

The report looked at over half of the Fortune 500 companies and found they got $223 billion in tax subsidies and ended up paying what amounts to about half the 35 percent corporate tax rate. Had they paid the full rate on profits, there would've been an extra $67.9 billion in the U.S. treasury. That's about $481 for each American taxpayer.

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    Sharyl Attkisson is a CBS News investigative correspondent based in Washington.