A comprehensive new study that profiles 265 consistently profitable Fortune 500 companies finds that 68 of them paid no state corporate income tax in at least one of the last three years and 20 of them averaged a tax rate of zero or less during the 2008-2010 period. These are among the findings in "Corporate Tax Dodging in the Fifty States, 2008-2010" released today by the Institute on Taxation and Economic Policy (ITEP) and Citizens for Tax Justice (CTJ).

"Our report shows these corporations raked in a combined $1.33 trillion in profits in the last three years, and far too many have managed to shelter half or more of their profits from state taxes," said Matthew Gardner, Executive Director at the Institute on Taxation and Economic Policy and the report's co-author. "They're so busy avoiding taxes, it's no wonder they're not creating any new jobs."

Among the 20 corporations who paid zero or less in state corporate income taxes over the three year period are:

Utility provider Pepco Holdings (DC); pharmaceutical giant Baxter International (IL); chemical maker DuPont (DE); fast food behemoth Yum Brands (KY); high tech manufacturer Intel (CA). 

"Corporate Tax Dodging in the Fifty States, 2008-2010" concludes that these 265 corporations cost states $42.7 billion in lost revenues in the last three years, and Gardner identifies three chief causes for state corporate tax revenues steadily declining for two decades. First, state lawmakers continue to enact tax subsidies requested by corporations, most of which don't produce the promised economic results. Second, federal tax breaks enacted in the past decade further reduce state corporate income tax revenues since states generally accept corporations' federal tax numbers. Third, said Gardner, "and most insidious, is that multi-state corporations themselves devote their money and legal firepower to coming up with tax avoidance schemes."

The report describes profit shifting and other common corporate tax avoidance strategies and outlines several reforms state lawmakers can immediately implement to ensure profitable corporations doing business in each state pay closer to the statutory rate, including:

• Implement combined reporting, which effectively treats a parent company and its subsidiaries as a single corporation for state tax purposes. It eliminates most of the advantage of shifting profits into Delaware, Nevada and other low- or no-tax states.
• Decouple from federal tax loopholes, such as bonus depreciation, and other provisions which reduce the amount of taxable income corporations have to claim in their state tax filings.
• Increase disclosure, transparency and accountability. Corporations should be required to publicly report their in-state profits, as well as any subsidies or loopholes they are exploiting each year.

All 265 corporations, headquartered in 36 states, are listed in the report at www.ctj.org/corporatetaxdodgers50states .