It's a fairly common "fact" that if you make enough money, that you can hire lawyers who can hide all of your money, so that you end up paying little to no tax. Is this true?
Yes, some "rich" (meaning big and usually multinational) companies pay taxes that are significantly lower than predicted by their theoretical income tax rate for their income bracket. Examples include (from Forbes):
As far as the explanation of how that happens, an income tax code contains an enormous amount of ways for a large multinational to reduce taxes owed.
Among the most impactful general principles as far as this question are the ones dealing with:
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Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress.
In 2005, one in four large United States corporations paid no taxes on revenue of $1.1 trillion, compared with 66 percent in the overall pool.
In 2004, a G.A.O. study said that 7 in 10 of all foreign corporations doing business in the United States, or foreign-controlled corporations, paid no taxes from 1996 through 2000, compared with 6 in 10 United States corporations.
The story also includes a quote from a fella from the Tax Foundation, an organization well-known to peddle corporate propaganda about taxes, about how the untaxed corporations are just simply the corporations that lost money, making no profit, and thus paying no taxes. Although such examples certainly do exist, the statement is false, as is most everything that you hear out of the Tax Foundation.
In fact, a NYTimes author, in a blog post, linked a mash-up of articles rebuffing the Tax Foundation, and I found this in that mash-up:
the actual tax rates paid by US corporations are extraordinarily low, around 6%.
Remember the latest GAO report (reported elsewhere on ataxingmatter) that shows that two-thirds of US corporations pay no federal income tax. That's not just the ones that are losing money, but also many corporations that have record high profits (including some Big Oil companies) that end up paying next to nothing in taxes.
As a result, the US is actually a corporate tax haven, with the lowest effective corporate tax rates of almost all the countries that participate in the OECD. That's a little fact that the Tax Foundation apparently doesn't want the American public to understand, since all its hype is in terms of statutory rates and not in terms of effective tax rates.
Just to give an example, one way to avoid paying corporate income tax is to provide goods & services, for pennies on the dollar, to a subsidiary operating in a foreign country that doesn't tax them. By doing so, you erase your domestic profits by sending it to a foreign subsidiary in the form of goods & services, which they then use to make even larger profits, which they then send back to you, untaxed.
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Stories like General Electric Paid No Taxes In 2010 are common in America. I can remember reading similar stories over the years. It would be surprising if only GE pays no tax - otherwise, how would other giant companies compete with GE?