WASHINGTON – Verizon was among 26 Fortune 500 corporations that were consistently profitable between 2008 and 2012 yet paid no federal income taxes, according to a new study.
The findings are part of a survey of 288 profitable corporations by Citizens for Tax Justice. The report also found New York-based Corning Inc. and Consolidated Edison paid a tax rate of less than zero over the same period, while Armonk-based IBM claimed $13.2 billion in federal tax breaks.
Verizon spokesman Bob Varettoni said the company paid $2.9 billion in state and federal income taxes over the time period covered. He did not specify how much was paid in each category.
"Verizon is one of the largest taxpayers and investors in America,'' Varettoni said.
In addition, the report failed to account for income taxes Verizon paid on behalf of Vodafone during the five years. Vodafone owned 45 percent of Verizon Wireless at that time, Varettoni said.
Daniel Collins, a spokesman for Corning, said Citizens for Tax Justice, a liberal-leaning group, "doesn't understand this basic principle of tax law and the accounting rules.''
"From 2002 through 2005, Corning incurred large-scale losses of about $6 billion,'' Collins said in an email. "As required by U.S. federal tax laws, we are applying these losses against yearly earnings, thereby reducing the company's U.S. tax liability. We will continue to do so until we have either used up all the loss carry-forwards we have or the 20-year limitation expires.''
A Con Edison spokesman said in an email that, "the accelerated federal tax depreciation of our billions of dollars in capital investments has allowed us to partly finance infrastructure improvements, including (Superstorm) Sandy storm-hardening projects."
That federal tax break was one reason Con Edison could freeze electric rates for two years and gas and steam rates for three years, according to the spokesman, Bob McGee.
"We remain New York City's largest property taxpayer, as well as one of the largest taxpayers in New York State,'' he said.
Citizens for Tax Justice said its report, which updates a 2011 study, is intended to highlight the use of tax breaks — such as the loss carry-forwards claimed by Corning — at a time when the congressional effort to overhaul the tax code reaches a crossroads.
Former Democratic Sen. Max Baucus of Montana, chairman of the Senate Finance Committee, resigned earlier this month following his confirmation as ambassador to China.
Baucus had collaborated over the past year with Republican Rep. Dave Camp, chairman of the House Ways and Means Committee, to build a bipartisan coalition for tax reform.
Camp plans to release his own draft proposal Wednesday. The New York Times reported Tuesday that he will call for lowering the top corporate tax rate to 25 percent.
But with so many other policy issues stalled in Congress and Baucus gone, there's little chance tax reform legislation will pass this year. Senate leaders confirmed that Tuesday.
Citizens for Tax Justice Director Bob McIntyre said he hopes his group's new study will generate public support for closing corporate loopholes.
"At some point, the public has got to wake up and demand it,'' he said. "You would think it would have happened already.''
McIntyre said the most egregious finding of his group's study is that one-third of the companies surveyed pay less than 10 percent in taxes. Some use tax breaks for capital expenses such as accelerated depreciation to greatly reduce their tax burden. And multinationals with overseas operations can attribute profits from products sold in the U.S. to subsidiaries located in a tax haven.
"And at the other end, you have the ones that can't threaten to leave to the United States and they have to pay the regular rate," he said. "Congress doesn't give them tax breaks. It's a crazy system.''
The study found Cablevision Systems paid a tax rate of 0.3 percent and Time Warner Cable paid 3.9 percent between 2008 and 2012. Their competitor, Comcast, paid 24 percent.
One of the biggest tax breaks claimed by corporations was stock options for top executives, which are deductible from corporate income taxes but don't reduce earnings reported to stockholders.
Goldman Sachs and Facebook each claimed just over $1.5 billion in deductions from stock options. PepsiCo and MasterCard, both headquartered in the Westchester community of Purchase, also claimed large deductions. PepsiCo claimed $450 million and MasterCard deducted $231 million for stock options.
Among 125 firms that earned at least 10 percent of their pretax profits from overseas operations, two-thirds paid a lower tax rate in the U.S., the study found.
The rate IBM paid on its overseas operations, for instance, was five times higher than the rate it paid on U.S. operations over 12 years. Between 2011 and 2012, the study found, IBM paid a rate of 5.2 percent in the U.S. while paying 29.3 percent overseas.
McIntyre said that finding repudiates claims by business lobbyists that the U.S. levies the highest corporate taxes in the world and needs to lower the statutory rate of 35 percent.
"The lobbyists are all saying we have to cut the U.S. corporate tax rate because other countries are being so nice to us,'' McIntyre said. "It's not true. In fact, most of them pay higher taxes in countries where they do business abroad than they do in the United States.''
IBM said last week the Citizens for Tax Justice report "is misleading and does not represent an accurate depiction of IBM's tax liability owed on its U.S. operations.''
The report was based on the taxes that IBM actually paid and not on its "accrued taxes,'' which are due at a later date.