4-13-11artfuldodgers-final by BerylCoder

VIEWS: 48 PAGES: 14

									                              The Artful Dodgers
    How a Dozen Multinational Corporations Spent a Billion Dollars on
     Lobbying and Campaign Contributions and Avoided Paying Taxes



Twelve large American corporations have been identified by news reports, nonprofit
organizations, and elected officials as paying little or no federal income taxes.
Collectively, these one dozen corporate tax dodgers have benefited dramatically – in
tax loopholes, bailouts, and subsidies – from the more than $1 billion dollars they
have invested into influencing Washington. As Americans pay their taxes this month, it
is important to understand that our political system lets these corporations off the hook
while the rest of us foot the bill.




                                 April 13, 2011
                   www.publicampaign.org/reports/artfuldodgers
The Artful Dodgers                                                                                                                                                                                                                     Public Campaign


Background

Every year, Americans work hard to earn enough to both support their families and pay
their taxes – an effort that gets increasingly difficult due to declining wage standards and
an increasingly complex tax code. Roads, armies, and social welfare all cost money, and
we all must bear the burden to ensure that America can continue to fulfill its destiny year
after year. But having spent the first three months of the year earning enough just to settle
their tax bills,1 average Americans have a right to be angry upon learning that some of the
country’s largest corporations aren’t paying any federal income tax at all—despite
making billions in profit. At a time when Congress and the President are slashing
government spending with budget cuts that strike at the middle class and most vulnerable,
Americans want to know why big corporations aren’t paying their fair share. And they
want to know why the people elected to represent the people have let it happen.

Unfortunately, the truth is that not only did Congress permit corporations to get away
without paying – they caused it to happen by passing a series of loopholes and gimmicks
for multinational corporations that allow them to shelter profits in overseas business
entities. According to the non-partisan Government Accountability Office (GAO),
eighty-three of the 100 largest publicly traded U.S. corporations utilize such tax havens to
reduce their U.S. tax liability.2 Ironically, these accounting tricks aren’t available for
companies that only do business in the United States, so Congress in effect is providing
tax incentives to ship jobs overseas and dismantle the middle class.

These tax loopholes didn’t happen by accident. They developed as a result of a consistent
campaign of lobbying and political contributions by big corporations that can afford to
throws millions of dollars around Washington each year. Much of this effort was targeted
at the two congressional committees responsible for writing tax laws: the House Ways
and Means Committee and the Senate Finance Committee.

To shed light on this story, Public Campaign analyzed the lobbying expenses and
political contributions of 12 large, well-known corporations, their political action
committees (PACs), and their executives. These 12 corporations were chosen because
they have been identified by news reports, nonprofits, and elected officials as egregious
corporate tax dodgers. It should be noted that what these large corporations are doing to
avoid tax payments is perfectly legal. But as we have often noted about our campaign
finance laws, the scandal is what is legal, not illegal.

It won’t come as any surprise that we found that the dozen tax dodging corporations
invested heavily in Washington politics. While the extent to which these corporations and
their executives spent is not knowable – corporations and wealthy executives regularly
give to trade associations and political organizations without disclosing the donations –
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
1
  “Your Tax Bill: Three Months of Work,” CNNMoney (March 31, 2011). Available online:
http://money.cnn.com/2011/03/31/pf/taxes/tax_freedom_day/index.htm/.
2
  “International Taxation: Large U.S. Corporations and Federal Contractors with Subsidiaries in
Jurisdictions Listed as Tax Havens or Financial Privacy Jurisdictions,” Government Accountability Office
(December 18, 2008). Available online: http://www.gao.gov/products/GAO-09-157.


                                                                                                                                                                                                                                   2
The Artful Dodgers                                                                                                                                                                                                                     Public Campaign


Public Campaign’s analysis found that the dozen corporations, their PACs, and
executives spent more than $1 billion over the last ten years to influence Washington.

Oil Companies

Oil companies are perhaps the original multinationals, with most large firms owning
stakes in oil fields and refining facilities in dozens if not hundreds of locations all over
the world. Many, like Chevron, ExxonMobil, Valero and ConocoPhillips are based in the
United States and trade on American stock exchanges. Top-level American government
officials on energy policy consult their chief executives, and, as the BP disaster recently
showed, the mismanagement of their activities can lead to extensive costs to the
American government and people. Yet these four oil corporations in particular pay
almost nothing in federal income taxes. In fact, the oil companies profiled below have
benefitted from tax refunds and rebates in profitable years, lucrative government
contracts, and substantial subsidies. The Obama administration estimates the federal
government would save about $4 billion per year by ending tax subsidies to oil, gas and
fossil fuel producers.3

ExxonMobil

As a direct descendant of John D. Rockefeller’s
Standard Oil, Texas-based ExxonMobil is one the
petroleum industry’s longest-standing corporations
and an icon of American business. Yet it is also one of the country’s worst polluters,
responsible for the Exxon Valdez disaster of 1989 and for the decades-long Greenpoint
oil spill in New York. Exxon has also spent widely to promote research by organizations
skeptical of global warming science.4

Exxon is also one of America’s most flagrant tax avoiders. According to a report by Sen.
Bernie Sanders (I-Vt.), the company made $19 billion in profits in 2009 but paid no
federal income taxes. In fact, “it actually received a $156 million rebate from the Internal
Revenue Service (IRS), according to its SEC filings.”5 	
  
	
  
Perhaps some of that money was recycled back into the government. Over the past ten
years Exxon’s PAC and employees have made $5.7 million in federal campaign
contributions, with $433,000 of it going directly to members of the House Ways and
Means and Senate Finance Committees. It also spent $137 million on federal lobbying


	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
3
  “FACT SHEET: The State of the Union: President Obama's Plan to Win the Future” The White House (,
January 25, 2011). Available online: http://www.whitehouse.gov/the-press-office/2011/01/25/fact-sheet-
state-union-president-obamas-plan-win-future.
4
  Union of Concerned Scientists (January 3, 2007). Available online:
http://www.ucsusa.org/news/press_release/ExxonMobil-GlobalWarming-tobacco.html.
5
  “Ten Giant U.S. Companies Avoiding Income Taxes: Sen. Bernie Sanders List,” Chicago Sun-Times
(March 27, 2011). Available online:
http://blogs.suntimes.com/sweet/2011/03/ten_giant_us_companies_avoidin.html.


                                                                                                                                                                                                                                   3
The Artful Dodgers                                                                                                                                                                                                                                          Public Campaign


expenditures over that same period to make sure its voice was being heard as loud as its
money.


                                                                                                                                                                                                                            Quick Facts on ExxonMobil

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $5.7 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $138 million
                                      Government Contracts: $840 million in 2008; $6.8 billion from 2000-2008
                                      Profits in 2009: $19 billion
                                      Taxes Paid for 2009: $0
                                      Tax Rebate for 2009: $156 million



Chevron

Based in California and with business interests in 84 countries, Chevron
is one of America’s five largest companies. It is also one of its largest
tax dodgers, having been accused of evading “$3.25 billion in federal
and state taxes from 1970 to 2000 through an involved petroleum
pricing scheme that involved a project in Indonesia,” according to
CNN.6 More recently, according to the Sanders report, Chevron received a $19 million
tax refund on its $10 billion profits from 2009.

Like Exxon, Chevron has made extensive efforts to influence the federal tax code through
carefully placed campaign donations and lobbying efforts. Over the past 10 years the
company’s PAC and employees have given $4.4 million in contributions, $115,000 to
members of the tax-writing committees alone. It also has an active lobbying presence in
Washington, spending $91 million over the same time period to influence Congress.	
  


                                                                                                                                                                                                                                   Quick Facts on Chevron

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $4.4 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $91 million
                                      Government Contracts: $324 million in 2008; $2.6 billion from 2000-2008
                                      Profits in 2009: $10 billion
                                      Tax Refund for 2009: $19 million


	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
6
 “Tax Evasion by ChevronTexaco?” CNN (September 13, 2002). Available online:
http://money.cnn.com/2002/09/13/news/companies/chevron_texaco/index.htm.


                                                                                                                                                                                                                                             4
The Artful Dodgers                                                                                                                                                                                                                               Public Campaign




ConocoPhillips

Texas-based ConocoPhillips, owner of such gasoline
brands as Conoco and Union 76, is one of the largest
oil companies in the world, with 29,900 employees
located in 30 countries.7 Like many oil companies in this era of rising gasoline prices, its
recent profits have been substantial: $16 billion between 2007 and 2009.8 Business has
been going so well, in fact, that it recently gave its CEO, Jim Mulva, a 25 percent raise
for total compensation of $17.9 million.9

The company hasn’t been shy about passing out dollars on Capitol Hill either.
ConocoPhillips’s PAC and employees have spent $2.5 million over the past ten years on
federal campaign contributions. Of that, $119,500 was targeted to members of the House
Ways and Means Committee and an additional $70,950 went to the Senate Finance
Committee. ConocoPhillips also has an aggressive lobbying operation, spending $63
million over that same time period to influence lawmakers and regulators in Washington.


                                                                                                                                                                                                                 Quick Facts on ConocoPhillips

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $2.5 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $63 million
                                      Profits from 2007 to 2009: $16 billion
                                      Tax Breaks for 2007 to 2009: $451 million through the oil and gas
                                      manufacturing deduction


Valero Energy

Unlike Exxon and Chevron, both of which explore for oil,
Valero Energy is a petroleum product manufacturer and refiner,
with operations throughout North America and the Caribbean.
As one of the industry’s largest companies, it is also one of the
worst polluters, ranked 16th in the world by the Political
Economy Research Institute, and it has been politically active in fighting efforts to
regulate greenhouse gas emissions.10 In 2010, Valero spent more than $4 million to


	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
7
  ConocoPhillips (accessed April 12, 2011). Available online:
http://www.conocophillips.com/EN/about/worldwide_ops/Pages/index.aspx.
8
  Chicago Sun-Times (March 27, 2011).
9
  “ConocoPhillips CEO's Compensation up 25 Percent,” ABC News (April 4, 2011). Available online:
http://abcnews.go.com/Business/wireStory?id=13293879.
10
   Political Economy Research Institute (accessed April 12, 2011). , “Environmental Justice and the Toxic
100 Corporations.” Available online: http://www.peri.umass.edu/ej/.


                                                                                                                                                                                                                                   5
The Artful Dodgers                                                                                                                                                                                                                                Public Campaign


support California’s Proposition 23, which would have suspended implementation of the
state’s Global Warming Solutions Act.11

Valero also has an extensive federally focused political operation. The company’s PAC
and employees have spent $4.1 million over the past ten years on federal campaign
contributions, with $294,000 of it going to members of the House and Senate tax-writing
committees. Valero’s generous giving has been matched by an equally expensive
lobbying operation costing $4.8 million over the same ten-year period.
                                                                                                                                                                                                                   Quick Facts on Valero Energy

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $4.1 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $4.8 million
                                      Government Contracts: $1.0 billion in 2008; $4.4 billion from 2000-2008
                                      Sales in 2009: $68 billion
                                      Tax Refund for 2009: $157 million
                                      Tax Breaks Over Last 3 Years: $134 million through the oil and gas
                                      manufacturing deduction


Banks

Three years ago, when it appeared the American economy was on the verge of collapse,
Congress approved $700 billion in taxpayer-funded bailout funds, the Troubled Assets
Relief Program (TARP), to prop up the same domestic banking sector that caused the
recession. Soon after, however, when the Obama administration wanted to enact common
sense regulatory reforms to ensure that banks couldn’t put the economy at risk again, the
financial industry swarmed Capital Hill with lobbyists to water down the bill. Yet
despite their ability to wrest billions of dollars from the government and defeat sensible
regulation, some of the country’s major financial institutions, including Bank of America,
Citigroup, and Goldman Sachs, pay little to no federal taxes at all.

Bank of America

Since then, the bank has tried to portray itself as
consumer-oriented, though that effort has been
marred by revelations that it paid a $137 million
fine to the Securities and Exchange Commission (SEC) for having engaged in bid-rigging
and other non-competitive behavior in their efforts to sell “municipal bond derivatives to

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
11
  “Valero Contributes Another $3 Million to Prop. 23 Campaign,” Los Angeles Times (August 9, 2010).
Available online:
 http://latimesblogs.latimes.com/california-politics/2010/08/valero-drops-another-3-million-into-initiative-
campaign.html.


                                                                                                                                                                                                                                   6
The Artful Dodgers                                                                                                                                                                                                                        Public Campaign


various state agencies, municipalities, school districts and nonprofits.”12 The bank
received a $1.9 billion tax refund from the IRS last year, despite making $4.4 billion in
profits.13

Bank of America has a large governmental affairs program proportionate to its size. Over
the past ten years the company’s PAC and employees have spent $11 million on
contributions to federal candidates, with ten percent ($1.1 million) going to members of
the relevant tax committees in the House and Senate. These contributions are married to
an extensive lobbying effort to lower the bank’s tax and regulatory burden. Overall, for
the past ten years, Bank of America has spent $24 million on lobbying.


                                                                                                                                                                                                         Quick Facts on Bank of America

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $11 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $24 million
                                      Bailout Funds: $20 billion to save itself, $25 billion to buy Merrill Lynch,
                                      $118 in loan guarantees
                                      Profits in 2010: $4.4 billion
                                      Tax Refund for 2010: $1.9 billion



Citigroup

Citigroup, which operates in 140 countries worldwide, was one
of the largest contributors to the collapse of the banking sector in
2008, having been widely exposed to the housing derivatives
market. As with Bank of America, the federal government was
forced to provide a total of $45 billion in direct support and
hundreds of billions more in loan guarantees to keep the company afloat.14 Nevertheless,
it has done well since then, in part by drastically minimizing its tax burden. Last year,
Citigroup made more than $4 billion in profits but paid no federal income taxes.15

The bank has long had close ties in Washington, including having Robert Rubin, the
Treasury secretary during the Clinton administration, as an advisor during the banking
crisis. Its PAC and employees have given $15 million in federal campaign contributions
since 2000, with $1.5 million of it going to members of the House Ways and Means and

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
12
   “BofA Pays $137 Million to Settle Fraud Charges,” Reuters (December 7, 2010). Available online:
http://www.cnbc.com/id/40551830/BofA_Pays_137_Million_to_Settle_Fraud_Charges.
13
   Chicago Sun-Times (March 27, 2011).
14
   “Citigroup $45 Billion Rescue Based on `Fear of the Unknown,' Barofsky Says,” Bloomberg News
(January 13, 2011). Available online: http://www.bloomberg.com/news/2011-01-13/citigroup-45-billion-
rescue-based-on-fear-of-the-unknown-barofsky-says.html.
15
   Chicago Sun-Times (March 27, 2011).


                                                                                                                                                                                                                                   7
The Artful Dodgers                                                                                                                                                                                                                                            Public Campaign


Senate Finance Committees. It has an extensive lobbying operation too: over the past ten
years it has spent $62 million lobbying on Capitol Hill.


                                                                                                                                                                                                                                   Quick Facts on Citigroup

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $15 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $62 million
                                      Bailout Funds: $45 billion directly and hundreds of billions more in loan
                                      guarantees
                                      Profits in 2010: $4 billion
                                      Taxes Paid for 2010: $0
                                      Tax Refund for 2010: $1.9 billion


Goldman Sachs

Although it packaged and sold many of the financial products
that helped create the housing bubble that led directly to the
economic collapse of 2008, Goldman Sachs was one of the few
major financial companies to emerge from the banking crisis
relatively unscathed, in part because it was fortunate enough to
receive a $10 billion federal bailout and almost $800 billion in
federal loans. It then proceeded to pay 953 employees bonuses
of at least $1 million, a move that drew outrage nationwide and
prompted six senior executives to decline the extra compensation.16 That same year, the
company paid only 1.1 percent of its income in taxes even though it earned a profit of
$2.3 billion.17

Goldman’s successes are due in large part to its close ties to policymakers in Washington.
Two of its former executives, Robert Rubin and Henry Paulsen, have served as Treasury
secretary, and it maintains an extensive government relations practice. Over the past ten
years its PAC and employees have given $22 million in federal campaign contributions,
with $1.4 million of that targeted at members of the House and Senate tax-writing
committees. It has also spent $21 million lobbying the federal government over that time
period.




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
16
   “Wall Street Compensation – ‘No Clear Rhyme or Reason’,” Wall Street Journal (July 30, 2009).
Available online: http://blogs.wsj.com/deals/2009/07/30/wall-street-compensation-no-clear-rhyme-or-
reason/.
17
   Chicago Sun-Times (March 27, 2011).


                                                                                                                                                                                                                                              8
The Artful Dodgers                                                                                                                                                                                                                            Public Campaign




                                                                                                                                                                                                               Quick Facts on Goldman Sachs

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $22 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $21 million
                                      Loans to weather financial crisis: $800 billion
                                      Profits in 2008: $2.3 billion
                                      Taxes Paid in 2008: 1.1 percent of income




Transportation

Moving things has long been a lucrative business, but ever since the nation’s first canals
and railroads were built, it’s been known to be even more profitable when companies
have access to subsidies and special treatment by the government. Whether it’s using a
lobbying network to get the Defense Department to overturn the award of a contract to a
rival or structuring corporate operations to avoid paying taxes, Boeing, Carnival, and
Federal Express are leaders in using government to maximize profits.

Boeing

Boeing is one of the nation’s most connected
firms in Washington, D.C., so much so that
from the 1950s to the 1980s, Sen. Henry
Jackson (D-Wash.) was nicknamed the “senator from Boeing” for his efforts in moving
government contracts to the Seattle-based company. Decades later, the company still has
considerable pull on Capitol Hill, which it exercised in 2008 when it successfully
appealed the loss of a $35 billion Air Force refueling tanker contract to Northrop
Grumman. After an extensive lobbying effort, government auditors voided the contract,
rebid it, and eventually awarded it to Boeing.18 These same lobbying efforts have paid
off when it comes to Boeing’s tax bill. It received a $124 million tax refund from the IRS
last year.19

Boeing’s success is tied to its high level of political involvement at the federal level.
Between 2000 and 2010, the company’s PAC and its employees contributed more than
$10 million to political candidates and committees, with almost ten percent of that ($923
thousand) going to members of the House Ways and Means and Senate Finance
Committees. Boeing also spent $115 million during that same time period on lobbying
the federal government.
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
18
   “EADS Won’t Protest Loss of Tanker Contract to Boeing,” New York Times (March 4, 2011). Available
online: http://www.nytimes.com/2011/03/05/business/global/05tanker.html.
19
   “Chicago Sun-Times (March 27, 2011).


                                                                                                                                                                                                                                   9
The Artful Dodgers                                                                                                                                                                                                                                         Public Campaign



                                                                                                                                                                                                                                   Quick Facts on Boeing

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $10 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $115 million
                                      Government Contracts: $24 billion in 2008; $169 billion from 2000-2008.
                                      Recently received $35 billion contract from Pentagon.
                                      Taxes Paid in 2010: $0
                                      Tax Refund in 2010: $124 million


Federal Express

Federal Express, whose presence in Washington is as
ubiquitous as its delivery trucks, is experienced at
exploiting loopholes to evade tax liability. Unlike its
main rival UPS, FedEx classifies the men and women
who drive its trucks as independent contractors, thereby obviating the company of the
obligation to pay employment taxes. (In 2007, the IRS decided that the company could
owe as much as $319 million for 2002 alone, but the decision was later withdrawn.) The
company is also an expert at avoiding income taxes. When it recently reported $1.9
billion in profits, it used 21 different tax havens to trim its tax liability to less than .0005
percent of its income.20

FedEx’s success in getting favorable tax treatment is due in part to its successful efforts
to influence lawmakers on Capitol Hill. The company’s PAC and employees have given
$8.7 million in federal campaign contributions over the past ten years, with $797,000 of it
going to members of the tax committees in the House and Senate. The company also
spent $71 million in lobbying expenditures during that same ten-year period.


                                                                                                                                                                                                                                   Quick Facts on FedEx

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $8.7 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $71 million
                                      Government Contracts: $64 million in 2008; $7.3 billion from 2000-2008
                                      Recent Profits: $1.9 billion
                                      Recent Taxes Paid: .0005 percent of income, paid in 21 tax havens




	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
20
            U.S. Uncut (accessed April 12, 2011). Available online: http://www.usuncut.org/targets/fedex.


                                                                                                                                                                                                                                            10
The Artful Dodgers                                                                                                                                                                                                                                           Public Campaign




Carnival

Carnival Cruise Lines relies heavily on federal
and local governments to keeps its ships safe
from pirates and to build the port complexes
required for its massive ships, yet the company
also pays among the lowest tax rate of any American corporation. According to the New
York Times, “Over the last five years, [Carnival] has paid total corporate taxes—federal,
state, local, and foreign—equal to only 1.1 percent of its cumulative $11.3 billion in
profits.” The company is able to do this because its ships are legally registered in
Panama, allowing the firm to shelter its profits there, though it also pays very little in
Panamanian taxes.21

Carnival spends a tremendous amount of money trying to influence policymakers in order
to protect its lucrative tax position. Over the last ten years the company’s PAC and
employees have given $1.7 million in federal campaign contributions, with $131,099 of
that going to members of the House Ways and Means Committee and another $100,300
to members of the Senate Finance Committee. The company also spent $1.6 million on
lobbying expenditures during that period.


                                                                                                                                                                                                                                   Quick Facts on Carnival

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $1.7 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $1.6 million
                                      Profits over Last 5 Years: $11.3 billion
                                      Taxes Paid for Last 5 Years: 1.1 percent



Telecommunications and Technology

From net neutrality to patent law to taxes, telecommunications and technology companies
have significant business interests regulated at the federal level. As two of the largest
capitalized companies in the industry, Verizon and General Electric are also among the
biggest players in Washington, spending hundreds of millions of dollars each year to
influence policymakers and lobby regulators. Their investments have paid off
handsomely: due to tax loopholes related to overseas profit, neither firm has paid
significant federal income taxes for years.


	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
21
  “The Paradox of Corporate Taxes in America,” New York Times (February 1, 2011). Available online:
http://www.nytimes.com/2011/02/02/business/economy/02leonhardt.html.


                                                                                                                                                                                                                                             11
The Artful Dodgers                                                                                                                                                                                                                                          Public Campaign


Verizon

Verizon’s television ads feature a man walking around with
his cell phone asking, “Can you hear me now?” One might
think it was the IRS on the other line futilely trying to ask the
company when it would start paying its fair share of taxes. In
2010, for instance, Verizon was the subject of congressional
outrage when it exploited a tax loophole to sell 4.8 million rural phone lines at a profit
while avoiding $600 million in taxes.22 And in 2010, the company paid nothing in federal
income taxes on $12 billion in profits.23

Verizon’s broad interests on Capitol Hill have been matched by an even greater effort to
use the political and regulatory process to maximize profits and minimize tax liability.
Over the past ten years, Verizon’s PAC and employees have given $12 million in federal
campaign contributions, with $1.1 million of that going to members of the relevant tax-
writing committees. Verizon’s lobbyists have also been extremely active: the company
has spent $131 million on their efforts over the same time period.


                                                                                                                                                                                                                                   Quick Facts on Verizon

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $12 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $131 million
                                      Government Contracts: $488 million in 2008; $5.1 billion from 2000-2008
                                      Profits in 2010: $12 billion
                                      Taxes Paid for Last 2 Years: $0



General Electric

General Electric is the world’s second largest company, with more
than 300,000 employees in 100 countries worldwide.24 It is also one
of the worst polluters—number six in the world—according to the
Political Economy Research Institute,25 and a committed tax avoider.
Since 2006, the company has earned $26 billion in profits, but not



	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
22
   “Lawmakers Aim to Stop Verizon Sale to Frontier,” PC World (January 7, 2010). Available online:
http://www.pcworld.com/businesscenter/article/186250/lawmakers_aim_to_stop_verizon_sale_to_frontier.
html.
23
   U.S. Uncut (accessed April 12, 2011). Available online: http://www.usuncut.org/targets/verizon.
24
    General Electric (accessed April 12, 2011). Available online:
http://www.ge.com/company/factsheets/corporate.html.
25
   Political Economy Research Institute (accessed April 12, 2011).


                                                                                                                                                                                                                                             12
The Artful Dodgers                                                                                                                                                                                                                            Public Campaign


only has it not paid any income tax, it benefitted from a refund of $4.1 billion for that
time period.26

General Electric takes tax avoidance so seriously that its tax department, headed by a
former Treasury official, “is often referred to as the world’s best tax law firm,” according
to the New York Times. The department’s mission statement, according to one company
official, urged employees to split their time between normal compliance operations and
“looking to exploit opportunities to reduce tax.” In addition to reducing its tax burden by
sheltering profits overseas, it has spent heavily on lobbying efforts to gain advantageous
green credits for its wind turbines and generous depreciation schedules that allow it to
quickly write off long-term expenses against income.27

General Electric is also one of the country’s most generous givers of campaign donations.
Over the past ten years, the company’s PAC and employees have given $13 million in
federal contributions, with $1.6 million of it going to members of the House Ways and
Means and Senate Finance Committees. The company also has one of Capitol Hill’s
busiest lobbying operations, spending $205 million over the past ten years to influence
lawmakers and regulators.


                                                                                                                                                                                                            Quick Facts on General Electric

                                      Campaign Contributions: Total Over 10 Years (2001-2010), $13 million
                                      Lobbying Expenditures: Total Over 10 Years (2001-2010), $205 million
                                      Government Contracts: $3.9 billion in 2008; $24 billion from 2000-2008
                                      Profits Over Last 5 Years: $26 billion
                                      Tax Refund for Last 5 Years: $4.1 billion




Conclusion

Elected officials across the political spectrum are talking about the need for shared
sacrifice to reduce our deficit. Both Budget Committee Chairman Paul Ryan (R-Wisc.)
and President Obama have talked about getting rid of special interest tax loopholes. But,
talk doesn’t equal action. And it’s not going to happen as long as well-heeled companies
like G.E. or Chevron are able to use millions in lobbying and campaign contributions to
advocate for the creation of loopholes and tax breaks, and against their closure.
Reforming our tax code won’t happen when every line in it has a special interest that will
push back against any increase.

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
26
  U.S. Uncut (accessed April 12, 2011). Available online: http://www.usuncut.org/targets/generalelectric.
27
  “G.E.’s Strategies Lets It Avoid Taxes Altogether,” New York Times (March 24, 2011). Available online:
http://www.nytimes.com/2011/03/25/business/economy/25tax.html?_r=1.


                                                                                                                                                                                                                                   13
The Artful Dodgers                                                                                     Public Campaign


Perhaps the blame rests on the systemic barriers to change, though, and not Congress’
seeming inability to come to agreement on what to cut.

Main Street Americans can’t hire big lobbyists or donate thousands in campaign cash to
politicians. If corporations continue to purchase access and influence, they will continue
to have a head start in avoiding paying their fair share. That leaves our nation’s debt and
annual deficits unfairly heaped on the backs of everyday Americans.

That’s why Congress must address the way campaigns are financed. One such proposal is
the Fair Elections Now Act (S. 750, H.R. 1404), which would allow candidates to run
competitive campaigns for office without relying on wealthy donors to fund their
campaigns. With Fair Elections, candidates can rely solely on people back home to pay
for their campaigns, freeing them to make decisions based on what’s right, not what will
affect their campaign bank account.

Only then might we see government of, by, and for the people—not the tax-dodging, big
corporations who fund campaigns today.




About Public Campaign
Public	
  Campaign	
  is	
  a	
  non-­‐profit,	
  non-­‐partisan	
  organization	
  dedicated	
  to	
  sweeping	
  
campaign	
  reform	
  that	
  aims	
  to	
  dramatically	
  reduce	
  the	
  role	
  of	
  big	
  special	
  interest	
  
money	
  in	
  American	
  politics.	
  Learn	
  more	
  at	
  www.publicampaign.org.	
  




                                                            14

								
To top