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, released Tuesday, said about 68 percent of foreign companies doing business in the U.S. avoided corporate taxes.
The companies reported trillions of dollars in sales, according to GAO’s estimate. An outside tax expert, Chris Edwards of the libertarian Cato Institute, said increasing numbers of limited liability corporations and so-called “S” corporations pay taxes under individual tax codes. “Half of all business income in the United States now ends up going through the individual tax code,” Edwards said.
The GAO study did not investigate why corporations weren’t paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.