UPDATE: Inflammatory report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

UPDATE: Inflammatory report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

Summary: At a time when the job market is tough and the US economy is struggling, we see organizations clamoring for some kind of action against those that know how to succeed.

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I received multiple emails this morning linking to a new report (PDF link) from the Citizens for Tax Justice and Good Jobs First organizations that shows Verizon paid an effective tax rate of -2.9 percent between 2008 and 2010. Our tax system needs a major overhaul when corporations can play the loophole and subsidy game to avoid helping contribute to our society. Verizon is the most expensive wireless carrier in the U.S. and with Occupy Wall Street (and other areas) protesters and events going on this is not good news for Verizon.

We haven't yet seen an official response to this report from Verizon, but the report is quite detailed and used publicly available financial data to report its findings.

Verizon doesn’t use its tax avoidance gains to keep up its copper network or extend its fiber optic technology to cities like Boston, Baltimore, Buffalo or other communities or create quality jobs. It isn’t negotiating a fair contract with the workers who have made this company so successful but instead is demanding nearly $1 billion in givebacks and making sure that its top executives stay in the top 1 percent of Americans. That’s why we say ‘the 99 percent’ are picking up Verizon’s tax tab,” Collins said.

It appears that the real problem for Verizon is that they are not necessarily using these tax savings to help customers afford service or provide additional benefits for employees. While the report is pretty clear Verizon is playing the tax game to the best of its abilities, the US government needs to change the system too so that these types of games cannot take place.

I worked hard growing up with a single mom and currently work two jobs to support my family and succeed so I don't appreciate when games like this are played at my expense. I pay a fair share of taxes and expect all in the U.S. to do so as well. I am quite pleased with my new iPhone 4S on Verizon and am not going to drop their service due to this report, but it does cross my mind that this is a strategy I may follow through with in the future.

I thought the reported seemed a bit one-sided in it's wording and as you can see with the official Verizon statement this report is a politically motivated one that really seems to have little value. I think there was a time for unions in the past, but see very little value in them in today's modern society where employers cannot take advantage of the employees anymore.

The report from yesterday is a rehash of the same inaccurate and politically motivated statements that union-orchestrated front groups like the CTJ have been making for some time. The fact is, Verizon fully complies with all tax laws and pays its fair share of taxes. As stated in our 10Ks, Verizon has paid more than $7.5 billion over the past five years in state and federal income taxes alone. This amount does not include other taxes, such as property taxes, taxes on gross receipts, payroll taxes and right-of-way fees.

By way of background, CTJ has a history of mixing incorrect facts with a political agenda when describing Verizon’s taxes. Previous reports have been used to support allegations by the CWA, whose members went out on strike against Verizon in August. The CWA’s president is on the board of the CTJ. In fact, 8 of the CTJ's 13 board members are executives in national unions.

Two weeks ago, many of these same inaccuracies appeared in a another CTJ/CWA report about Verizon tax payments over the past three years. We noted then, as I reiterate today, that Verizon paid out $1.79 billion in taxes over 2008-2010, and reported earnings of $5.25 billion over this same period. In addition, Verizon has annually invested $16.5 billion in technology infrastructure. This investment has created and sustained jobs, so U.S. economic development policy allows for the payment of some taxes to be deferred. The CTJ treats deferred taxes as non-existent, it does not account for the $1.79 billion in taxes Verizon paid out over the past three years despite deferrals, and it incorrectly calculates earnings for Verizon to include income belonging to Vodafone, Verizon's partner in Verizon Wireless.

I'm glad that Verizon responded with an official statement, but I do regret giving the CTJ unnecessary attention it doesn't deserve.

Topics: Government US, Banking, Government, Verizon

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32 comments
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  • Name me a corp that does not game the system

    If it was a real concern, the politicos would close the holes. As soon as they do that the corps start talking off-shoring. Fun and games, fun and games...
    happyharry_z
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @happyharry_z

      If it was a real concern to whom? And so now the argument isn't "corporate taxes are too high, so American companies offshore" now we've moved on to "if you want our company to operate in the U.S. your taxpayers have to subsidize our operating costs?"

      What a joke!
      dsf3g
      • Simple. If you want to protest

        Take your service elsewhere and Not Verizon. This will cut into their profits and they will get the message.

        With the money they have and all the lobbying, they are getting away with murder.

        No company should be allowed to get away without paying at least 20% in taxes.
        Uralbas
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @happyharry_z - Corporations don't threaten offshoring anymore, it's already done. Congress didn't even pretend to put up a fight over that. All the megacorps have to do now is pay money (hard dollars) to the politicians to get what they want. They call it campaign contributions, but it all goes to the same place.
      terry flores
    • No the loopholes benefit the politicos

      @happyharry_z Many of the politicians have vested interests in the big companies. The loopholes were designed to benefit their friends.

      It's clear the tax laws benefit the bankers. Why else would you be able to deduct mortgage interest?

      So for the real source of the problem, look no further than Washington DC.
      otaddy
  • Way to demonstrate your total ignorance of what economics is. Hint

    Rich people spend their money.
    baggins_z
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @baggins_z Way to demonstrate your ignorance of what rich people do. Overwhelming data shows they don't spend money, they hoard it. When they do spend money they don???t spend much of it here. They spend most if it abroad.
      thetruthisoutther
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @baggins_z - Rich people don't spend money, that's how they stay rich. Unlike the "family of four" that spends %109 percent of their earnings each year, the rich spend only a few percent of their income in any given year. Most of the money actually works like a perpetual motion machine, earning even more income for the person without having to lift a finger. And all that income is taxed at a lower rate than what you or I pay.

      It's a sweet deal if you can get it.
      terry flores
  • Yeah we need tax reform. Support your local tea party candidate.

    Support the fair tax. But don't whine about the verizon workers have contracts that are plenty fair. And dont whine about the 99% because 47% percent of them are paying nothing, which is less than their fair share.
    Johnny Vegas
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @Johnny Vegas


      The 47% pay payroll taxes, sales taxes, tolls, DMV registration taxes, property taxes etc, etc, etc. They pay plenty of taxes (more as a percentage of income than the richest Americans). What they don't pay is income taxes, and the reason they don't is because they make a pathetically small amount of money. In fact, they make so little money that RONALD REAGAN, patron saint of the Teabaggers pushed through a major increase in the earned income tax credit to encourage and promote employment of people who make too little money in income to pay Federal taxes.
      dsf3g
      • For the past five years Corporations and the Rich have gotten tax breaks

        To create jobs.<br><br>Its been five years.<br><br>I ask these corporations.. where are the jobs?<br><br>No jobs.. no tax break simple.<br><br>Five years no jobs.. more profits. They should pay 50% in taxes so others can create jobs.<br><br>And I have conservative view. Just that this period in time. If jobs aren't created, the country will take a hit. We can't keep on making it worse. Ford was smart when he created more jobs and gave more money to his employees, so that they could actually purchase a Model T. Thats how the economy grows. It does not grow on tax breaks.
        Uralbas
      • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

        [i]I ask these corporations.. where are the jobs?[/i]<br><br>They had their chance. They were phony promises outsourced to the lowest bidder overseas. That's why they shouldn't be believed and the taxes need to be raised again. Might as well get something off them while you still can.
        ScorpioBlue
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @Johnny Vegas Because those 47% are below the poverty line dumb@ass.
      thetruthisoutther
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @Johnny Vegas - Not much to pay tax on when you have no job and no income. This statistic is so over-used it's pathetic. There's a different statistic that nobody mentions: How much of the GDP is really taxed, and where is it the thinnest? The unsurprising answer is that 90%+ of personal income is taxed. Less than 50% of corporate income is taxed. And the lowest taxes on income are paid by the rich, because of the low capital gains rate.
      terry flores
  • Money out &lt;= Money In

    Corporations are not buckets. They are pipes. Those who think they can tap the pipe without requiring that more be put into the pipe are deluding themselves. There is only one way that money gets into the Verizon pipe: from their customers. Anyone who tells you that he knows how to tax money away from Verizon (or any company, for that matter) without the customers ultimately paying it is a liar. There is no other place for the money to come from.
    Robert Hahn
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @Robert Hahn - You are confused, but I will try to explain: the taxes being mentioned are on corporate [b]profits[/b], not revenues. The taxes not being paid end up going into the execs' pockets as bonuses, not as investments in the company, or lower prices to the customers. It doesn't even make it back to the shareholders if I have read the Verizon 10-K report correctly; the shareholders are not getting any great bargains for their holdings.
      terry flores
      • I wonder, do you believe that bonuses are not taxable?

        Bonuses are another form of income, and taxes are levied on all forms of income. So, if a corporation is using the taxes due to pay bonuses, the taxes are eventually collected from the added income of those executives.

        Also, you need to start understanding that, corporations don't pay taxes, even if they do show corporate taxes on their yearly statements.

        Guess who ends up paying those taxes that you would wish to have collected? And, congresspeople already understand that part about corporations not paying the taxes, but, they're okay with that. Also, you need to be okay with that, because, the more taxes a corporation has to pay, the fewer dollars there will be for expansion and for jobs creation. In fact, the lower the taxes paid by corporations, the more taxes that are collected by government. It's counter-intuitive, but, it's something that no liberal will ever understand or care to understand.
        adornoe
      • Political accounting?

        Money is fungible. Therefore, absolutely nothing you said there rises above the level of political claptrap.
        Robert Hahn
      • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

        @terry flores
        If that is the case, then the Execs will pay a hefty INCOME tax on those bonuses, in fact, most likely at a HIGHER rate than VZ would pay.
        tbuccelli
    • RE: Report states Verizon shifts tax bill to the 99 percent, sees -2.9 percent tax rate

      @Robert Hahn That's because we have become a culture of greed. Those customers you speak of paid for the roads and bridges the corporations use to ship their goods. They paid for the education that prepared the workforce the corporations employ and they paid for the entire infrastructure that provides power and utilities to their place of business. It is a ridiculous position to believe that corporations deserve to be subsidized by their consumers as a "privilege" of doing business here. Instead of contributing back to the very system that allowed them to become successful, they suck every drop of profit out of the consumer and deliver it their beloved shareholders without any care for sustainability. This plunder mentality needs to change quickly or the entire system will ultimately collapse. No consumers = No profits. End of game.
      thetruthisoutther