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Headlines Q & A- Taxes

What is the estimated percentage of U.S. corporations that paid no federal taxes betw


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What is the estimated percentage of U.S. corporations that paid no federal taxes between 1996 and 2000?

a. 21%
b. 46%
c. 61%
d. 71%

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According to a February 2004 report issued by the General Accounting Office an estimated 61% of U.S. corporations paid no federal taxes between 1996 and 2000. The same study also found that 71% of foreign controlled corporations with operations in the U.S. paid no federal taxes over the same period.

Some of the possible reasons for why U.S. corporations did not report any tax liability during the period include:
-current year operating losses
-loss carry-forwards from prior years
-sufficient tax credits to offset tax liabilities
-improper transfer pricing

According the GAO, improper transfer pricing occurs when, "income and expenses are improperly allocated among interrelated companies for the purpose of reducing taxable income in a high-tax jurisdiction." Corporate taxes from both domestic and foreign controlled corporations are expected to account for approximately 9% or 169B USD of the 1.7T USD in revenue the government is anticipating to collect in 2004. In 2003 corporate tax receipts only accounted for 7% of total government receipts.

The largest single component of government revenues in 2004 will be the individual U.S. citizen who will account for 43% of all receipts or 765B USD.