Civil Society Groups Take Aim At Corporate Bribe Payers And Tax Dodgers

Protester holds sign containing figures from a recent report

ProgressOhio/Flickr

Two prominent advocacy groups have released major reports last week exposing unsettling truths about bribery and tax dodging schemes among large corporations in the United States and around the world. Berlin-based Transparency International published its annual Bribe Payers Index on Tuesday, ranking 28 countries on the perceived likelihood of bribery within their companies, followed only days later by the Corporate Tax Payers & Corporate Tax Dodgers 2008-2010 report by Citizens for Tax Justice and the Institute on Taxation and Economic Policy.

These reports might come as a windfall for Occupy demonstrators who have ramped up the scope of their protests by shutting down the nation’s fifth busiest port in Oakland, Calif. on Tuesday.

Even as prosecutions under the U.S. Foreign Corrupt Practices Act have produced record sentences in recent years, the United States’ bribery score according to Transparency International has remained stagnant since the organization first published the index in 2008, with many of Europe and Asia’s advanced economies scoring consistently higher.

Most inflammatory, however is the finding from the CTJ/ITEP report that 30 of the nation’s 280 largest corporations paid no federal taxes over the same period from 2008 to present, with 78 of them showing at least one of those years without taxes. On paper, the federal tax code dictates that corporations pay 35% taxes on profits. However, the existence of loopholes granting credits and refunds to large corporations has actually translated to net negative tax rates among several firms, for instance Pepco Holdings (-57.6% tax rate), General Electric (-45.3%), Verizon (-2.9%), and many more.

The corporations included in this latter survey collected total pretax profits of US$1.4 trillion while claiming US$223 billion in subsidies. Company spokespersons for the biggest corporate tax dodgers insist that they have “have fulfilled all tax obligations to federal, state and local communities where we serve our customers.” Yet, the fact that this behavior is legal is not in question. The question is, as a recent post on this blog argues, not even whether this is fair, but if it can even be considered “decent”.

Despite considerable distraction out of Greece and the greater Eurozone, the G20 summit wrapped up in Cannes, France at the end of the week. In the final communiqué, issued on Friday, the G20 leaders committed to promoting “social inclusion” and making “globalization serve the needs of the people”. If protests around the world have not effectively communicated those needs, or at least a segment of them, then perhaps in combination with expanding research by civil society groups, our international leadership will be galvanized to stronger action.