5 Juicy Tax Breaks That Corporations Enjoy That the Public Can't Touch
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- Superstorm Sandy devastated millions of American families, but corporations got to deduct the full value of their losses from their taxes
Millions of American families suffered damage to their homes and property last year, from Superstorm Sandy, western fires and other natural disasters. The federal tax code expects human property owners to pick up the full cost of damage for an amount equal to ten percent of the taxpayer’s annual reported income. Beyond the ten percent threshold, any additional losses may be taken as a tax deduction.
In contrast, corporations face no such income threshold. Corporate shareholders are not asked to absorb damages equal to ten percent of the corporation’s taxable income as individual families are. Corporations can –and do – deduct every dollar of losses they incur. Many firms, including Verizon and other utilities serving the New York and New Jersey areas saved millions of dollars on their 2012 taxes by deducting the full costs of Sandy damage on their taxes.
- If you are an American citizen working abroad you pay American taxes on your foreign earnings; if you are an American corporation you can indefinitely delay paying U.S. taxes on income you earn abroad.
About five million American citizens live or work abroad. Come April 15th, each of them is expected to file a tax return and pay U.S. taxes on all their income. The amount they owe is reduced by an amount equal to any taxes they paid to foreign governments on that income.
But U.S. corporations get a different deal, called deferral. They get to indefinitely put off paying U.S. taxes of their foreign until and unless they bring those funds back to America. This loophole costs the U.S. Treasury almost $60 billion a year. Senator Bernie Sanders (I-VT) recently introduced the Corporate Tax Dodging Prevention Act, which would close this loophole, putting corporations and real humans on the same footing come tax time.
As many people work hard to make corporations less human on election day, perhaps it is time to make them more human on tax day.
Scott Klinger is an Associate Fellow at the Institute for Policy Studies.