It is very shameful for U.S.A that many corporations make large profits and pay nothing to support their country though these companies reported trillions of dollars in sales. A recent study of Congress shows that like other countries in U.S.A most of the corporations and foreign companies doing their business without pay no federal income tax. This new study by the Government Accountability Office, waited for to be released on 12 August Tuesday. It finds out those two-thirds of American. Corporations paid no federal income taxes between 1998 and 2005; on the other hand around 68 percent of foreign companies continue their business in the U.S.A avoided corporate taxes above the same time.
But nowadays there is increasing a good number of limited liability corporations as well as so-called “S” corporations pay their taxes under individual tax codes. On the other hand fifty percent of all business income in the U.S.A now ends up going through the under individual tax code.
The study did not identify or investigate why corporations were not interested to pay federal income taxes or corporate taxes, on the other hand it did not discover any corporations by name. The study said companies may escape paying such income taxes due to operating and management losses or on account of tax credits.
Moreover around 38,000 foreign corporations had no tax liability in the period 2005 and about1.2 million U.S. companies paid no income tax. Those companies combined had $2.5 trillion in sales. On the other hand, around 25% of the U.S. corporations not paying any corporate taxes were considered large corporations but these had no less than $250 million in assets or $50 million in receipts. The study said that the analyzed data from the Internal Revenue Service and it scrutinized over110, 003 tax returns from among more than 1.2 million corporations continue business in the U.S.A.
There is a complain about companies abusing transfer prices and it happen on amounts charged on transactions between companies in a group, for example a parent and subsidiary. Most of the cases, multinational companies are able to manipulate transfer prices to shift income from higher to lower tax jurisdictions, cutting their tax liabilities. But now the U.S government takes step for the big corporations to pay their fair share.