Sunlight Foundation tracks donations/lobbyist spending to corporate tax breaks

The Sunlight Foundation looked at the eight companies that spent the most on lobbying and found that all of them saw their reported tax rates drop. This drop in tax rates effectively reduced the taxes the companies paid in 2010 by $11.2 billion. From Sunlight Foundation:

On average, companies we examined reported paying a slightly lower overall tax rate in 2010 than in 2007 (average tax rate of 29.3 percent in 2010 as compared to 29.9 percent in 2007), with a decline in the median reported tax rate from 31.8 percent to 31.6 percent. Fifty-five percent of the companies paid a lower rate in 2010 than in 2007.

But the eight companies that spent the most on federal lobbying between 2007 and 2009 all decreased their overall tax rate between 2007 and 2010. Six of the Big Eight enjoyed a decrease of at least seven percentage points.

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Statistically, the likelihood of the eight firms that ran up the biggest lobbying tabs all lowering their reported tax rates by chance alone is just under one percent (assuming we take the overall probability of an individual company lowering its taxes at 55 percent). Moreover, only 19 of the nation’s 200 highest earning companies reduced their tax rate by more than seven percentage points. Within this universe of companies, the likelihood of six of the Big Eight lowering their rates by at least seven percentage points purely by random chance is less than 1 in 100,000.

This is the perverse impact of money on our politics. Politicians need to raise large amounts from donations to run for office. In exchange politicians can help insert minor changes into legislation that result in some companies getting billions in tax credits or deductions. For a company spending just a few million on donations and lobbyists, this is a rather cheap investment with high returns.

There are a lot of negative things you can say about large corporations, but they are not stupid. Corporations wouldn’t have spent hundreds of millions on lobbying unless they thought the investment was helping them shape legislation to their benefit.

The Sunlight Foundation looked at the eight companies that spent the most on lobbying and found that all of them saw their reported tax rates drop. This drop in tax rates effectively reduced the taxes the companies paid in 2010 by $11.2 billion. From Sunlight Foundation:

On average, companies we examined reported paying a slightly lower overall tax rate in 2010 than in 2007 (average tax rate of 29.3 percent in 2010 as compared to 29.9 percent in 2007), with a decline in the median reported tax rate from 31.8 percent to 31.6 percent. Fifty-five percent of the companies paid a lower rate in 2010 than in 2007.

But the eight companies that spent the most on federal lobbying between 2007 and 2009 all decreased their overall tax rate between 2007 and 2010. Six of the Big Eight enjoyed a decrease of at least seven percentage points.

[…]

Statistically, the likelihood of the eight firms that ran up the biggest lobbying tabs all lowering their reported tax rates by chance alone is just under one percent (assuming we take the overall probability of an individual company lowering its taxes at 55 percent). Moreover, only 19 of the nation’s 200 highest earning companies reduced their tax rate by more than seven percentage points. Within this universe of companies, the likelihood of six of the Big Eight lowering their rates by at least seven percentage points purely by random chance is less than 1 in 100,000.

This is the perverse impact of money on our politics. Politicians need to raise large amounts from donations to run for office. In exchange politicians can help insert minor changes into legislation that result in some companies getting billions in tax credits or deductions. For a company spending just a few million on donations and lobbyists, this is a rather cheap investment with high returns.

There are a lot of negative things you can say about large corporations, but they are not stupid. Corporations wouldn’t have spent hundreds of millions on lobbying unless they thought the investment was helping them shape legislation to their benefit.

Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at http://pendinghorizon.com