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.