NC Budget and Tax Center

Profiles in tax avoidance: IBM

The government shutdown finally ended last week, but the fight for a balanced approach to the federal budget continues. As part of the deal struck last week, Congress agreed to negotiate a comprehensive budget agreement that addresses sequestration and opens the door for new revenues. Perhaps the best potential source of new revenues comes from reining in the special tax loopholes, deductions, and outright giveaways that allow too many corporations to avoid paying their fair share in taxes.

Over the last year, we’ve profiled some of these tax loopholes, along with the corporations that use them to avoid their responsibilities. This month’s issue takes a look at IBM, which earned $45 billion in profits over the past five yeas, and managed to shelter almost $20 billion of those profits in offshore bank accounts to avoid US taxation. As a result, Big Blue managed to lower its actual effective tax rate to 5.8 percent, well below the statutory corporate tax rate of 35 percent.

As long as corporations like IBM are able to avoid paying their taxes, the rest of us will be asked to pick up the tab for addressing our nation’s budget challenges through spending cuts to key investments that grow our economy and protect our most vulnerable.

For more details, see the profile on IBM.

8 Comments

  1. Alex

    October 23, 2013 at 4:00 pm

    IBM is essentially not a US company any more with a majority of their employees and operations being overseas. With a global economy, corporations do not have to locate here especially if we try to raise their taxes and regulate them to death. Remember that stockholders are also paying taxes on the dividends and profits generated by IBM.

  2. david esmay

    October 23, 2013 at 6:07 pm

    So? That’s the privilege they pay for operating and living in the U.S..

  3. Alex

    October 23, 2013 at 7:18 pm

    In return for them loaning us money, we let the Chinese freely operate in this country with no barriers,no taxes, and with completely unfair trade practices. Think about what that costs us per year, and it dwarfs IBM.

  4. david esmay

    October 24, 2013 at 9:25 am

    Thank the right-wing U.S. Chamber of Commerce and their effective lobby for that Alex, you can also thank them for NAFTA, them and GHW Bush.

  5. Alan

    October 24, 2013 at 10:08 am

    Alex,

    As I have stated before, if you had any real business experience you would perhaps be a little better informed, rather than simply regurgitate GOP talking points. IBM, and many other large corporations, chose to move many of their operations overseas, not just to serve local markets, but to take advantage of lower labor rates, meanwhile devastating the domestic manufacturing base in this country. If you’re so concerned about the Chinese, then perhaps you should be up in arms about IBM having most of its products built in China?

    Please, enlighten us all on the “regulate them to death” and “unfair trade practices” comments, I’d love to know what these are. Also, since “corporations are people”, then surely they should pay their fair share, after all, it’s the patriotic thing to do.

  6. LayintheSmakDown

    October 24, 2013 at 5:52 pm

    And I was just pilloried recently for highlighting the high tax environment the US has. You know, only second to Japan in highest taxes among leading nations. You think that might have something to do with a company not wanting to bring their profits here and have a significant portion confiscated?

  7. Alan

    October 24, 2013 at 6:43 pm

    LSD, you were pilloried simply because your statements were totally, and demonstrably false. That’s what happens when you post factually inaccurate information (some would call it lies). The US does not have a corporate “high tax environment”.

    Again, I link to the GAO report on effective corporate tax rates, massively below your previously stated numbers. I know, facts can be difficult to handle when they don’t meet your political agenda.

    http://www.gao.gov/assets/660/654957.pdf

    Since SCOTUS determined corporations are people, then I’m sure you will agree with me that these ‘people’ should be paying their taxes also? More likely, your outrage will be selective.

  8. Alex

    October 24, 2013 at 10:10 pm

    Alan,my grandfather used to say if you don’t know what you’re talking about, don’t advertise it. That would be good advice don’t you think ?