Defense Contractors Pay Little To No Corporate Income Tax While Earning Billions

Last week, Citizens for Tax Justice released a report showing that 30 major corporations have paid no income taxes for the last three years, as they made $160 billion. CTJ looked at 280 companies in the Fortune 500, and found that “while the federal corporate tax code ostensibly requires big corporations to pay a 35 percent corporate income tax rate, on average, the 280 corporations in our study paid only about half that amount.”


In fact, over the last three years, only two industries — retail and health care — paid an effective tax rate of 30 percent or more. And as the Hill noted today, one industry is doing very well when it comes to tax avoidance — defense contractors:

American defense manufacturers pay an average annual tax rate of 17.5 percent, placing them in a class with some of the nation’s least-taxed sectorslike information technology, telecommunications, financial services and energy, Citizens for Tax Justice and the Institute on Taxation and Economic Policy concluded. [...]

Boeing, which also makes commercial aircraft, came in with the lowest tax rate among defense firms at -1.8 percent; SAIC had the highest at 28.7 percent, according to the report.

Boeing has been outspoken about its desire to see the corporate tax rate cut, even as it pays nothing in taxes. Prominent Republicans like House Budget Committee Chairman Paul Ryan (R-WI) have joined Boeing’s griping about corporate taxes, ignoring that the company doesn’t actually pay them.

Defense contractors have made billions in profits this year, and “so far earnings by defense contractors have yet to see the effects of the end of fighting in Iraq, plans to draw down Afghanistan and expected cuts in defense spending.”