Enron: One of the Nation’s Worst Corporate Welfare Queens
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
Taxpayers to Pay for Enron’s Scandalous Behavior?
Here is a news update from Taxpayers for Common Sense. TCS is the best organization that monitors excessive government spending, corruption and corporate welfare.
Enron: One of the Nation’s Worst Tax Scofflaws For the first time in quite a while, a news story has nudged terrorism from the front pages of the nation’s newspapers. Enron — one of the largest US corporations with over $100 billion in annual revenues — hid its pending financial implosion from the public, its investors and employees.
Enron’s economic subterfuge has not only cost the life savings of thousands of Enron employees and shareholders, it has placed a potential burden on the shoulders of American taxpayers.
The New York Times recently reported that for four out of the past five years Enron has not paid a dime in federal income taxes. To add insult to injury, Enron actually received a $382 million refund check. Last year, most individual taxpayers thought they were lucky to have received a $300 rebate check in the mail – Enron’s sum is outrageous!
While most companies are taxed at a 35% rate, Enron employed a variety of strategies to reduce their tax burden to less than zero. They created 881 subsidiaries in foreign countries that act as tax havens. The company also received deductions for stock options exercised by their executives. In 2000, they turned a $112 million tax bill into a $278 million refund through such deductions, as the New York Times reported.
Despite the tax windfall of hundreds of millions, Enron still wasn’t able to stay profitable. In October as bankruptcy approached, Enron Chairman Kenneth Lay contacted numerous high-level cabinet officials to request a bailout for his struggling company.
Enron has become such a political hot potato that it would have been political suicide for anyone to support a bailout. In fact, politicians have been donating Enron’s campaign contributions to charity in an effort to distance themselves from the controversy.
Enron was not alone in their avoidance of paying taxes. An Institute on Taxation and Economic Policy study of Fortune 500 companies found that 24 companies paid less than zero in federal income taxes in 1998.
This week the IRS announced an improved tax compliance program that through more aggressive audits will ensure that corporations and others pay their fair share of taxes. As the country faces a projected $100 billion deficit next year, the federal government should be keeping a better watch on corporate tax scofflaws.
Enron is an example of corporate welfare at its worst. They have avoided paying taxes for several years and when the company reached economic doom they turned to their friends from both sides of the political aisle with their hands out…way out. They should be ashamed of themselves.
For more information, contact Keith Ashdown at (202)-546-8500 ext. 110 or by email at email@example.com
TCS is at www.taxpayer.net
See Fred Foldvary’s editorial on the Enron scandal
There is nothing wrong with forming a subsidiary in a “tax haven” to avoid unjust taxes. But bailouts and special privileges are totally wrong. Enron’s conduct is costing American taxpayers. What should be done? Tell your opinions to The Progress Report!