Are corporations evil when they make huge profits but pay no taxes?

Recently there has been a furor in the media over General Electric, the world’s largest corporation, paying no US taxes of $14.2 billion in US profits. Exxon-Mobil is the world’s most profitable corporation, and they paid no US taxes in 2009 on $19 billion in US profits. Every year, something near 2 of every 3 US corporations manage to avoid paying any US corporate income taxes. If you look at revenue from corporate taxes, it has been steadily declining as a percent of GDP now for nearly 6 decades.

Of course this infuriates me just as much as it does the talking heads of the media who report on it. But I think their anger at the companies is misplaced. How many of us would fill out our tax return and deliberately not take a long list of deductions available to us so we could pay far more than the law requires? If we wouldn’t do it, why should we expect corporate management, whose fiduciary responsibility to investors is to maximize profits, to pay far more in taxes than they are required?

Shouldn’t we instead be angry at the politicians who let corporate lobbyist wine and dine them into writing a gagillion loopholes into the US Tax Code? Shouldn’t we be angry at Republicans who stripped funding from the IRS for tax auditors, even though each auditor brings in over $10 for every $1 spent to put them on the job? And ultimately, shouldn’t we the voters hold ourselves to task? After all, we keep electing the same circus of clowns that craft all these loopholes..

In truth, US corporations spend plenty to avoid paying taxes. They hire all the lobbyist that get them the loopholes. That came to $3.2 billion last year. Then there is GE. Sure they paid no taxes, but the tax return they filed was over 10,000 pages long. They have a department with over 9,000 accountants, attorneys and other workers to prepare that filing. And on top of that, they had to hire a small army of highly paid consultants.

We could collect FAR more by dropping the top corporate tax rate from 35% to 15% and eliminating the loopholes. And corporations would probably save money. It would be cheaper to just pay 15% of profits than to jump through all the hoops it takes to save paying any tax. What would it take to simplify the tax code and bring some rationality to the situating?