It Isn't Just a State and Local Problem

While cities and states are more likely to spend taxpayers money to lure individual corporations, the federal government subsidizes business in a less direct and more expensive way. Over the years, Congress has enacted scores of tax breaks that reduce or even eliminate federal corporate income taxes for many companies. Since these subsidies aren't part of the annual appropriations process, they never undergo the same scrutiny that spending programs do. Companies never have to prove that they need them or have earned them. And, since states usually link to the federal tax code, this means state tax collections suffer from federal tax subsidies, too. 

The companies illustrated on this page are examples of firms that have taken advantage of federal tax breaks, even while earning healthy profits. They are just a few of the firms that make up the $69 billion in federal tax breaks claimed each year. What's more, these firm have rewarded their CEO's with fantastic salaries, bonuses, and other compensation, while they announced layoffs of thousands of average workers in communities across the United States. Their concern has been not with the long term success of their companies and the communities in which they operate, but in short term stock price manipulations and shareholder profits. 

While they may be extreme examples, the firms listed here provide more evidence that the social compact between America's companies and her workers isn't what it used to be. It's time to restore the balance, and to make America's corporations accountable to America's communities and America's workers. At the federal level, a simple first step would be to eliminate some of the tax breaks that cost American taxpayers billions of dollars each year.

Allied Signal, Inc.

Over the past three years, Allied Signal has paid only 11.2% of its $2.8 billion in reported U.S. profits in federal corporate income taxes -- less than a third the 35% rate that big, profitable companies are supposed to pay. Why? Because even while it announced it was laying off 3,100 workers (10% of its workforce) and recording record third quarter profits in 1995, Allied Signal enjoyed $666 million in federal tax subsidies over the three years. In 1995 alone, for example, the company got $51 million in "accelerated depreciation" tax breaks, another $19 million in "foreign sales corporation" credits, and more than a hundred million dollars more in other special tax breaks. Meanwhile, Allied Signal's CEO, Lawrence Bossidy, was paid $8.4 million in salary and bonuses last year. 

AMOCO

Over the past three years, AMOCO has paid only 16.3% of its $4.8 billion in reported U.S. profits in federal corporate income taxes -- less than half the 35% rate that big, profitable companies are supposed to pay. Why? Because even as it announced 3,800 layoffs in 1994 (on top of 8,500 jobs eliminated in 1992), AMOCO enjoyed $896 million in federal tax subsidies over the past three years. In 1995 alone, for example, the company reports it got $179 million in "tax credits," and its other 1995 tax breaks totaled $71 million. Meanwhile, AMOCO's CEO, H. Lawrence Fuller, was paid $1.6 million in salary and bonuses last year. 

Bank America

Over the past three years, Bank America has paid only 20.3% of its $9.5 billion in reported U.S. profits in federal corporate income taxes -- less than three-fifths the 35% rate that big, profitable companies are supposed to pay. Why? Because even as it announced 3,750 layoffs in October 1993 (on top of 12,000 jobs eliminated in 1992), Bank America enjoyed $1.4 billion in federal tax subsidies over the past three years. Meanwhile, Bank America's CEO, Richard M. Rosenberg, was paid $11.9 million in salary and bonuses last year. 

MCI

Over the past three years, MCI has paid only 16.5% of its $3.2 billion in reported U.S. profits in federal corporate income taxes -- less than half the 35% rate that big, profitable companies are supposed to pay. Why? Because even while it was announcing 3,000 layoffs for 1995 (7.1% of its workforce), MCI enjoyed $ 124 million in federal tax subsidies. Indeed, were it not for the corporate Alternative Minimum Tax (which Republicans in Congress proposed to repeal), MCI apparently would have paid even less in federal income taxes in recent years. Meanwhile, MCI's CEO, Bert C. Roberts, Jr., was paid $2.2 million in salary and bonuses last year. 

Eastman Kodak

In 1995, Eastman Kodak paid only 17.3% of its $1 billion in reported U.S. profits in federal corporate taxes -- less than half the 35% rate that big, profitable companies are supposed to pay. Why? Because even after announcing 800 layoffs from its Kodak Park workforce in November 1994 (on top of 10,000 layoffs announced in 1993), Kodak enjoyed huge federal tax subsidies. Most of the $171 million in corporate welfare tax breaks that Kodak took advantage of in 1995 came from accelerated depreciation, which Kodak says cut its 1995 tax payment by $124 million. Meanwhile, Kodak's CEO, George M.C. Fischer, was paid $11.3 million in salary and bonuses last year. 

Mobil

Over the past three years, Mobil reports that it received $109 million in federal tax breaks. In other words, even while it was announcing 4,700 layoffs, including 1,250 in Virginia in 1995, Mobil was being subsidized by the federal government. Meanwhile, Mobil's CEO, Lucio A. Noto, was paid $3.0 million in salary and bonuses last year. 

Proctor & Gamble

Over the past three years, Proctor & Gamble reports that federal tax loopholes saved it $193 million. In other words, even as it began cutting 10,000 jobs starting in 1993 (12% of its workforce), Proctor & Gamble was being subsidized by the federal government. Meanwhile, P & G's CEO Edwin L. Artzt, was paid $4.0 million in salary and bonuses last year.

American Home Products

Over the three years from 1993 to 1995, American Home Products paid only 20.7% of its $5.1 billion in reported U.S. profits in federal corporate income taxes -- almost half the 35% rate that big, profitable companies are supposed to pay. Why? Because even as it announced layoffs for 4,000 workers in January 1995, American Home Products also reports that it enjoyed $723 million in federal tax subsidies from 1993 to 1995. In 1994 alone, for example, the company saved $112 million in taxes from tax breaks for operating in Puerto Rico and foreign tax havens, got $64 million in accelerated depreciation tax breaks, and got still another $24 million in "research" tax credits. Meanwhile, American Home Products' CEO, John R. Stafford, was paid $4.9 million in salary and bonuses last year. 

AT&T

Over the past three years, AT&T has paid only 19.9% of its $21 billion in reported U.S. profits in federal corporate income taxes -- almost half the 35% rate that big, profitable companies are supposed to pay. Why? Because even as it announced 44,000 worker layoffs in 1995, AT&T has enjoyed $3.1 billion in federal tax subsidies over the past three years. In 1995 alone, for example, AT&T reports it got $1.1 billion in accelerated depreciation tax breaks, plus another $360 million in other tax subsidies. Meanwhile, AT&T's CEO, Robert Allen, was paid $5.2 million in salary and bonuses last year. 

Kimberly-Clark

Over the past three years, Kimberly-Clark reports that federal tax loopholes saved it $274 million -- almost all of that in 1995 when it paid only 20.7% of its U.S. profits in federal corporate income tax. In other words, even as it announced 6,000 layoffs at the end of the year, Kimberly Clark was being subsidized by the federal government. (Scott Paper, which Kimberly-Clark acquired in 1995, laid off 10,500 workers in 1994.) Meanwhile, Kimberly-Clark's CEO, Wayne R. Sanders, was paid $1.6 million in salary and bonuses last year. 

Xerox

Over the 1993-95 period, Xerox paid only 18.1% of its $2.8 billion in reported U.S. profits in federal corporate income taxes -- almost half of the 35% rate that big, profitable companies are supposed to pay. Why ? Because even as it began slashing its workforce by 12,000 at the end of 1993 (10% of its workforce), Xerox enjoyed $55 million in federal tax subsidies. Meanwhile, Xerox's CEO, Paul A. Allaire, was paid $6.1 million in salary and bonuses last year.