Trucking Along, Avoiding Corporate Income Taxes

Chuck Sheketoff

The same company whose lawsuit made it possible for corporations to side-step Oregon’s corporate minimum tax turns out to be a federal corporate income tax avoider, as well.

The trucking company Con-way had a negative effective federal income tax rate over the 2008 to 2012 period, despite making $587 million in profits over those five years. In other words, Con-way made money by filing federal tax returns.

That’s one of the findings in The Sorry State of Corporate Taxes: What Fortune 500 Firms Pay (or Don’t Pay) in the USA And What they Pay Abroad — 2008 to 2012 (PDF), a report released by Citizens for Tax Justice (CTJ) and the Institute on Taxation and Economic Policy (ITEP). The Sorry State of Corporate Taxes (PDF) looks at the profits and federal income taxes of the 288 Fortune 500 companies that were profitable in each of the five years between 2008 and 2012.

Con-way is not unique in its tax-avoiding ways. The report identifies 25 other profitable corporations that had a negative effective federal tax rate for that entire five-year span. Of the 288 consistently profitable companies examined in the report, 111 paid zero or less in federal income taxes in at least one year from 2008 to 2012.

Con-way also knows how to avoid Oregon’s corporate income tax. Con-way reported Oregon sales of $79 million for tax year 2009. Instead of paying Oregon’s $75,000 corporate minimum tax, the corporation went to court (PDF) and obtained a loophole that allowed it to pay nothing — zip — in Oregon corporate income taxes.

Since then, a fleet of corporations have taken advantage of the Con-way loophole, taking millions of dollars away from schools, community colleges, worker-training programs and many key public structures that create economic opportunity and enhance the business climate.

State lawmakers need to close the Con-way loophole and put the minimum back into the corporate minimum tax that voters approved.

But that’s just one loophole. Ending corporate tax avoidance here in Oregon will require further steps.

One important step is requiring corporations to disclose to the people of Oregon how much, if any, Oregon taxes they have paid. We know that Con-way didn’t pay any federal taxes because that information appears in documents filed by publicly traded companies under federal transparency provisions. We also know, thanks to its lawsuit, that Con-way didn’t pay any Oregon corporate income taxes in at least one recent year. We don’t know, however, which other corporations are using the Con-way loophole to avoid state taxes altogether.

We need a disclosure law to find out the names of all corporations driving through the Con-Way loophole.

Until we take serious steps to prevent corporate tax avoidance, Con-way and other profitable corporations will continue trucking along, avoiding even the most minimal responsibility for the common good.

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Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

By Chuck Sheketoff Feb. 26, 2014