Most companies in US avoid federal income taxes - Yahoo! News

Category: Tax Law and Planning

While there are certainly causes for issue with Washington and the tax code, the misleading tone of this article from the top Yahoo News stories today is creating an issue where none exists:

Most companies in US avoid federal income taxes - Yahoo!: "WASHINGTON - Two-thirds of U.S. corporations paid no federal income taxes between 1998 and 2005, according to a new report from Congress.

The study by the Government Accountability Office, expected to be released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes over the same period. Collectively, the companies reported trillions of dollars in sales, according to GAO's estimate.

'It's shameful that so many corporations make big profits and pay nothing to support our country,' said Sen. Byron Dorgan, D-N.D., who asked for the GAO study with Sen. Carl Levin, D-Mich."

Well, duh! The only companies that pay corporate level tax - that is to say that the company itself is the taxpayer instead of its owners, are C-Corporations and Professional Corporations. An S-Corporation, LLC, or partnership is a tax-reporter, but the actual tax is paid by its owners. There is no tax avoidance here, the tax is paid either by the corporation or its owners - trillions of dollars of revenue are still created.

I think it is shameful that Sen. Dorgan is misconstruing true statistics to create an issue that does not exist - perhaps Congress should focus on more taxing problems?