Tax Dodger…Verizon
This is the eighth in a series on corporate tax dodgers. These summaries are taken directly from the report on Corporate Tax Dodgers by Americans for Tax Fairness and the Institute for Policy Studies
It is the same old story. Spend $15 million in a single year for lobbyists to convince legislators to pass laws allowing you to pay no taxes (from 2008 to 2012 Verizon actually had a negative 2.8 percent tax rate amounting to a $7.3 billion tax subsidy). Claim that low taxes create jobs and proceed to slash your workforce by 28,500 people. Drive America and her people into debt. Then have your multimillionaire CEO, Lowell McAdam, join “Fix the Debt” and the “Business Roundtable” to push for cuts to Social Security and Medicare to pay for the damage you have caused.
How long are Americans going to put up with such destructiveness? How badly will our children and elders need to suffer before we act?
The following summary of Verizon tax avoidance is from the report by Americans for Tax Fairness and the Institute for policy studies:
When the tax man rings, Verizon drops the call
Though Verizon made $19.3 billion in U.S. profits from 2008 to 2012, it paid no federal income taxes over the five years and instead claimed a refund of $535 million, according to a Citizens for Tax Justice analysis of the company’s Securities and Exchange Commission (SEC) filings. This gave America’s favorite cell phone company a tax rate of negative 2.8%. However, the corporate income tax rate is 35%, which means that tax subsidies cut Verizon’s taxes by $7.3 billion over that period.
Like other investment-intensive companies, Verizon was a major beneficiary of the economic stimulus bill of 2008, which provided it with hefty tax subsidies for doing things it would have largely done anyway, like build new cellphone towers.
Verizon also reported $1.9 billion in accumulated offshore profits in 2012, on which it paid no U.S. income taxes.
While dodging federal taxes, Verizon pockets lucrative federal contracts
Verizon raked in $956 million in federal contracts in 2011, according to the federal government. It also recently landed a new nine-year government-wide contract worth up to $5 billion to provide communications services and equipment to federal agencies.
Inflated corporate salaries subsidized by taxpayers
Verizon also has saved money by taking advantage of a loophole that allows it to get other taxpayers to pick up the tab for a third of the lavish pay offered to its executives. A 1993 law capped executive pay deductions at $1 million but left a huge loophole: corporations can exempt “performance-based” pay like stock options and grants of restricted stock. Verizon paid its top four officers $41 million in “performance-based” pay last year and cut its tax bill more than $14 million in the process.
Verizon lobbies hard for corporate tax cuts and Social Security benefit cuts
Verizon CEO Lowell McAdam is a member of the CEO Council of the Fix the Debt campaign, a corporate-funded group seeking to cut corporate taxes and earned benefit programs like Social Security and Medicare. McAdam is also a member of the Business Roundtable, a CEO club that is calling for Congress to cut corporate tax rates and to raise the Social Security retirement age from 67 to 70 – a benefit cut of about 20%. Verizon is also a founding member of the RATE Coalition, a corporate lobby group fighting for a much lower corporate tax rate. Verizon has spent more than $197 million lobbying Congress since 1998. It spent $15.2 million in 2012, with lobbying on tax bills its second-highest priority.
Verizon’s CEO has little skin in the Social Security debate, but that doesn’t stop him
CEO McAdam can afford to lobby for Social Security benefit cuts, his overflowing company provided retirement account will make his Social Security check little more than pocket change during his golden years. McAdam has been CEO of Verizon for a little more than a year but has still managed to accumulate $9.8 million in his retirement account, enough to earn him a monthly check for $55,496 starting at age 65. That’s 44 times the average Social Security retiree’s $1,265 monthly benefit. McAdam’s predecessor in the corner office, Ivan Seidenberg, retired from Verizon with more than $70 million in retirement assets, enough for a monthly check of nearly $400,000. Seidenberg is also active with Fix the Debt.
While Verizon hands out executive retirement perks, its employee pension and health care funds are swimming in a sea of red ink
Verizon has a pension deficit disorder when it comes to funding its employee pension and post-retirement health accounts, which together face a funding shortfall of more than $32 billion.
Even with a tax rate below zero, Verizon hangs up on jobs
We’re often told that cutting corporate taxes creates jobs. Though its tax rate is less than zero, Verizon has been an aggressive downsizer for many years. Over the last four years, Verizon has slashed its workforce by 28,500, or 13%.