Ford recalls 15,600 cars in South Africa over fire risk
JOHANNESBURG Ford Motor Co is recalling nearly 16,000 Ikon and Figo models in South Africa due to a potential fire risk, it said on Friday.
Thirty large and profitable U.S. corporations paid no income taxes in 2008 through 2010, said a study on Thursday that arrives as Congress faces rising demands for tax reform but seems unable or unwilling to act.
Pepco Holdings Inc, a Washington, D.C.-area power company, had the lowest effective tax rate, at negative 57.6 percent, among the 280 Fortune 500 companies studied.
The statutory U.S. corporate income tax rate is 35 percent, one of the highest in the world; but over the 2008-2010 period, very few of the companies studied paid it, said the report.
The average effective tax rate for the companies over the period was 18.5 percent, said Citizens for Tax Justice and the Institute on Taxation and Economic Policy, both think tanks.
Their report also listed General Electric Co, Paccar Inc, PG&E Corp, Computer Sciences Corp, Boeing Co and NiSource Inc as among the 30 that paid no taxes.
(For a related graphic, click on r.reuters.com/ryb84s).
Corporations will say rightly that the loopholes that let them slash their taxes were perfectly legal, the report said.
"But that does not mean that low-tax corporations bear no responsibility ... The laws were not enacted in a vacuum; they were adopted in response to relentless corporate lobbying, threats and campaign support," the report said.
Some of the 30 companies disputed the report's findings.
A Pepco spokesman said it "pays all its required taxes."
Boeing paid its taxes "between 2008-2010 ... Our effective income tax rate was 26.5 percent, 22.9 percent, 33.6 percent in 2010, 2009, 2008," said a spokesman for the aerospace group.
PRESSING FOR MORE
As Congress and the Obama administration struggle with a sluggish economy and high deficits, corporations are pressing Capitol Hill for more tax breaks and a lower corporate rate.
Taxes are on the agenda of the congressional "super committee" tasked with finding at least $1.2 trillion in additional budget savings by November 23, but it is so far deadlocked across a familiar divide -- Republicans refusing any tax increases, Democrats defending social programs.
On Tuesday, a panel of budget experts warned super committee members they would fail the country if they did not meet their goal. Financial markets have been waiting for many months for signs that Washington can get its financial house in order, but few have been forthcoming.
The report referred back to the 1986 tax reform pushed through by President Ronald Reagan, a Republican, who approved the largest corporate tax increase in U.S. history, largely by ending tax breaks, while cutting individual tax rates.
"Reagan solved the problem by sweeping away corporate tax loopholes," said the report, which was coauthored by Citizens for Tax Justice chief Robert McIntyre. His research 25 years ago played a key role in convincing Reagan reform was needed.
The industrial machinery business enjoyed the lowest effective tax rate during the study period, while the highest rate was paid by healthcare companies, the report said.
"Big Business is getting away with taxation murder," said Frank Knapp, vice chairman of the American Sustainable Business Council, a progressive business coalition.
"They pay little or no taxes on massive U.S. profits and then have the gall to lobby for ... a tax holiday to 'repatriate' profits they have stashed offshore."
MANY TAX BREAKS
What are some of the tax breaks that corporations enjoy? One big one is accelerated depreciation that lets them write off equipment faster than it actually wears out. Deductions on executive stock options help. So do tax breaks for research and development and for making products in the United States instead of overseas. Offshore tax shelters play a role, too.
Power group Duke Energy Corp was one of the 30 companies listed as paying no income taxes in 2008-2010.
Chief Executive James Rogers told Reuters that Duke cut its taxes thanks to accelerated depreciation, which he said helped the company build new plants and hire construction workers.
Rogers is a frequent spokesman for a coalition of large multinationals seeking a tax break that would let them bring foreign profits into the United States at a reduced tax rate.
Others among the 30 companies included power producer American Electric Power Co Inc (AEP), chemicals company DuPont and toymaker Mattel Inc.
Like Duke, AEP said it benefited from accelerated depreciation. A Mattel spokesperson said the report's claims were inconsistent with the company's public financial filings.
"DuPont complies with all tax laws and regulations in every jurisdiction in which it operates," said a DuPont spokeswoman.
The average effective corporate tax rate, as calculated by McIntyre's group, was about 14 percent before the Reagan reforms; afterward it shot up to 26.5 percent in 1988.
As companies found their way around the reforms, the effective rate fell back to about 17 percent by 2002-2003.
Unlike in Reagan's time, taming corporate tax breaks alone will not solve the deficit problem. Such breaks cost the government about $102 billion in lost revenues in 2011, a year when the federal deficit was an estimated $1.3 trillion.
Corporate loopholes are dwarfed by tax breaks that benefit individuals, such as the mortgage interest tax deduction -- a middle class sacred cow, on its own worth $104 billion.
Still, said the report: "If we are going to get our nation's fiscal house in order, increasing corporate income taxes should play an important role."
(Additional reporting by Matt Daily, Ernest Scheyder, Dhanya Skariachan in New York; Kyle Peterson in Chicago, editing by Gerald E. McCormick)
BERLIN German carmaker Volkswagen has agreed to buy back diesel cars equipped with illicit emissions control software after deciding not to appeal a German court ruling backing plaintiffs' calls for compensation.