Politics

GAO: Corporations saving $181 billion through tax breaks

Daily Caller News Foundation logo
Betsi Fores The Daily Caller News Foundation
Font Size:

The federal government continues to forgo more money to corporate tax expenditures, in the form of corporate subsidies and tax loopholes.

“In 2011, the Department of the Treasury estimated 80 tax expenditures resulted in the government forgoing corporate tax revenue totaling more than $181 billion,” a recent study by the Government Accountability Office found in a study analyzing the problem.

“Revenue lost by the government from corporate tax provisions rose to $180 billion in 2011 from $84 billion in 1987, according to the GAO. That figure was $116 billion in 2010, after which Congress further extended corporate tax write-offs,” Reuters reports.

The report comes as Congress dives into ways to simplify the tax code — specifically, ways to adjust the corporate tax rate. Both the Republican-controlled House and the president have expressed interest in lowering the corporate income tax rate, which is currently the highest of the world’s developed economies.

“Modifying any of these 56 tax expenditures as part of broader corporate tax reform would likely affect both corporate and individual taxpayers to some degree,” the GAO writes, along with noting that most of the tax breaks corporations take advantage of are used by individuals as well.

One of the criticisms of the corporate tax code is the is that companies can get preferential treatment. While corporations may be taxed at a 35 percent rate, there are various deductions, exemptions, credits and preferential tax rates corporations can claim to pay much less in taxes.

“Today, many Americans are paying their federal income taxes to contribute their fair share to the cost of our national security and of vital public services, but much of corporate America is still not doing the same,” Texas Democratic Rep. Lloyd Doggett said.

Doggett requested the GAO report and has introduced corresponding legislation to close corporate loopholes.

While there is consensus in favor of lowering the rate, special interests are keen on keeping the special loopholes intact.

“Special interests and corporations, meanwhile, told the Ways and Means Committee in the comments due Monday that they backed the easy part of tax reform — lower rates. They were not shy, however, about defending their favored tax expenditure,” Reuters reports.

Many experts argue that the corporate tax could be lowered in a way that is a boon to to the economy and revenue neutral.

“[T]he United States will need to address whether the excess revenue gained (if any) from maintaining the highest corporate income tax justifies the losses incurred to society from lower employment and wages, lower capital investment and returns, higher prices and lower quantity of goods, and slower economic growth,” Ellen Kant of the Tax Foundation argued in March.

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.