JANUARY 1982 - VOLUME 3 - NUMBER 1
Report says many corporate giants paid none in 1980
A number of major U.S. corporations and banks paid no U.S. taxes in 1980 on their U.S. income, according to a study published on December 14 by the Washington-based research group Tax Analysts. Making use of a recent change in income disclosure requirements by 'the U.S. Securities and Exchange Commission (SEC), the study analyzed data submitted to the government by nearly 100 U.S. firms - the largest commercial banks, oil companies, drug companies, utilities, chemical companies, steel companies, and industrial firms.
Among those multinationals which paid no tax or earned tax credits on U.S. income in 1980, according to the study, were Chase Manhattan, Manufacturers Hanover, Citicorp, Bankers Trust, Occidental Petroleum, ITT, Squibb, Monsanto, Hercules, Olin, Southern California Edison, and Richardson Merrill (see chart).
In industry-wide weighted averages for the U.S. tax rate on U.S. income, the study found that for the largest commercial banks the average tax rate was 2.2%; for the largest oil companies, 15.1%; for the largest chemical companies, 7.7%; for the largest steel companies, 14.5%; for regulated utilities, 7.9%; for the largest drug companies, 35.5%; and for major non-oil industrials, 27.7%.
The new SEC regulation that made possible these calculations this year for the first time requires firms to separate U.S. income from foreign income in their tax returns, according to Tom Field, publisher of the Tax Analysts publication Tax Notes in which the study appeared.
Prior to the SEC rules change, it was possible only to determine a corporation'; worldwide rate of tax or worldwide income, or its U.S rate of tax on worldwide in. come - both of which are unsatisfactory measures of its effective U.S. tax burden, Field said.
Given the fact that income disclosures required by the SEC are not complete as to the separation of U.S. and foreign factors, the Tax Analysts study represents "the best figures that can be derived from the public record," said Field. "With respect to virtually all multinational corporations, the rules of thumb that we used are those that accord with the facts," he said.
Neither Monsanto, which was given a tax rate in the study of -11.7% (a negative represents a tax credit), nor ITT, which paid no 1980 taxes according to the study, disputed the findings of the Tax Analysts report. "We did have all our, tax offset in 1980," said Jerry Ingenthron, director of Monsanto's news bureau. This was due primarily to the company's investments in new capital equipment for oil exploration, and to its use of export incentives through a Domestic International Sales Corporation (see accompanying story), Ingenthron said.