This post was made by Rick Cohen from Nonprofit Quarterly. Be sure to click the link to read the full post. Rick's comments are right on and clearly illustrate the double standard confronting nonprofits everywhere. As Rick relates:
Let’s see if we get this right. Nonprofits are leeches on society, they don’t pay taxes, they take our money (your money) and fail to pay their own way, they pay their executives exorbitantly, they spend too much on administrative costs, and, oh yes . . . they don’t pay taxes. This is worth saying twice, since taxes have become the prime mover of politics in recent years.
The argument is so tiresome, so monotonous, and so ill founded. It’s time to correct the record, not in tabulating how much taxes nonprofits actually pay (and they do: as employers paying matching employees’ FICA, as service providers frequently paying registration and licensing fees, as property owners paying user fees for water and sewerage, etc.), but in terms of how many tax-paying entities don’t pay the taxes they are supposed to pay or receive tax rebates.
Nonprofits are hardly the only tax-exempt nongovernmental entities in the U.S. By happenstance, hook, and crook, for-profit corporations frequently don’t pay taxes, get legislative bodies to exempt them from taxes, and they often pay their executives at levels that leave entire nonprofit budgets in the dust.
Compared to the relatively small number of nonprofits with revenues and real estate, the for-profit sector’s multiple navigation strategies to avoid federal, state, and local taxes leads to a basic question – which sector is the real tax-exempt sector?
If you know the way, you don’t have to pay—at the federal level
The crushing burden of federal taxes seems to leave many corporations much less crushed than nonprofits being hit with Unrelated Business Income Taxes (UBITs):
. This past March, Senator Bernie Sanders (I-VT) provided a list of corporate tax evaders, several of which are among the nonprofit sector’s most trustworthy corporate philanthropic benefactors:
1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
Business Insidermagazine added additional big corporations, not necessarily those with the name recognition of those on the Sanders list, that are paying next to no federal taxes:
· NextEra Energy: Pretax profits of $8.572 billion, effective tax rate of 1.74 percent
· Xcel Energy: Pretax profits of $4.334 billion, tax rate of 1.78 percent
· Amazon: Pretax profits of $3.512 billion, tax rate of 4.33 percent
· Host Hotels and Resorts: Profits of $1.116 billion, tax rate 3.05 percent
· TECO Energy: Profits of $1.62 billion, tax rate of 2.31 percent
Note that several of these corporations actually received tax rebates, putting their effective tax rates into the realm of negative percentages. In several cases, such as Exxon Mobil and Bank of America, their zero tax rates in 2009 were simply an extension of the lack of taxes they paid the previous year. In fact, many corporations over the years have managed to make their profits immune to taxation. A 2008 Government Accountability Office study found that more than half of U.S. companies doing business in the U.S. had paid no income taxes for at least one year between 1998 and 2005 and 42 percent had not paid taxes for at least two years.
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