Whirlpool Won’t Pay 35% Corporate Income Tax,
it Will Pay 0%
March 6, 2011 by Jane Jamison
From WSJ via the Tax Prof blog.
This will infuriate you if you are doing your income taxes.
WSJ: Whirlpool Parlays “Green” Credits Into Zero Tax Liability
Whirlpool Corporation recorded $18 billion in global sales and $619 million of earnings in 2010 but won’t pay anywhere near the U.S. statutory tax rate of 35% on those profits. Its effective tax rate will be 0%.
As Bloomberg first reported last week, Whirlpool has stockpiled more than $500 million in tax credits for making energy-saving “energy star” appliances—washers, dryers, refrigerators and so on. The firm gets a production tax credit of up to $200 per refrigerator, $75 per dishwasher, and $225 per washer and dryer. General Electric has also collected about $200 million of these credits.
Think of these energy efficiency tax carve-outs as a version of the earned income tax credit for corporate America. Except Whirlpool and GE aren’t poor.
The deal gets sweeter. Those credits can be carried over from one year to the next for up to 20 years. Whirlpool is collecting so many credits that it may not have to pay a dime of corporate income tax for years. The lost revenue from GE and Whirlpool alone far exceeds the $78 million revenue “cost” over 10 years that Congress’s Joint Committee on Taxation predicted for the credits. …
Special favors like these also create a business constituency against tax reform that would benefit the overall economy. Whirlpool carries its $500 million of unused tax credits as an asset on its balance sheet, so cutting tax rates shrinks the book value of that asset. “This is why so many companies actually oppose lowering tax rates,” says Scott Hodge, president of the Tax Foundation.
The White House claims to want to reduce corporate tax rates in a “revenue neutral way” by closing loopholes. Yet it’s hard to take that commitment seriously when its new budget proposes to extend the green-credit windfall for another year. Whirlpool is one more case study in the case for corporate tax reform.