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Ignorance of accounting principles, along with left-imbued philosophy, are churning up a political storm against beneficial future tax policies for U.S. industry—policies that could create needed American jobs.
One left-wing advocacy group, calling itself Citizens for Tax Justice (CTJ) (a real stretch in the definition of justice) is engaged in a study of Fortune 500 companies with the wacky accusation that some of the world’s more respected corporations deliberately don’t pay income taxes.
Previewing its major study, CTJ recklessly claimed, in an analysis of 12 major corporations that they pay an “effective tax rate of negative 1.5 percent on $171 million in profits and reap $62 billion in tax subsidies.”
The outlandish analysis, CTJ claimed “serves to illuminate the current corporate tax debate in Washington, and demonstrates that real corporate reform—meaning higher taxes–is long overdue.”
A flurry of sensational news media accounts recently about taxes paid by large corporations have fired up a debate over the different ways a company’s profits and tax liabilities are given to shareholders on financial statements and what is reported on a company’s tax return to IRS.
The Ways and Means Committee in June continued its series of hearings at which Chairman Dave Camp (R-MI) said, “The Tax Code is preventing, not promoting, job creation. Our focus is on what actions must be taken to reform our Tax Code and make America a more attractive place to invest and create the jobs we need.”
At the hearing, a member of the committee, the habitually arrogant Rep. Fortney “Pete: Stark (D-CA) asked to have inserted in the record the release from the Citizens for Tax Justice.
One of those corporate tax pros testifying was James H. Zrust, tax vice president for the Boeing Company. For the past three years, Rep. Stark recounted in an acid tone, Boeing made ”about $10 billion, but had a negative tax rate.”
Zrust attempted to respond, but Stark kept interrupting him, asking questions dripping with sarcasm:
“How much lower tax do you need to survive, Mr. Zrust?”
“Let me tell you what this [reported negative tax payment] is attributable to…,” Zrust tried to say.
“I know what is attributable to,” Stark shot back, as if he were all-knowing.
Finally, Zrust explained that deductible expenses of production in recent years were attributable to new products, an expanding workforce and pension costs. When allowed to speak, Zrust explained that in future years Boeing would be paying considerable taxes as its aircraft were sold—probably “in excess of 33 percent.” Zrust also mentioned that 30 IRS agents work continuously at Boeing offices to keep watch on Boeing’s proper tax accounting.
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