Posted on Thu, Dec. 08, 2011
last updated: December 08, 2011 08:38:38 AM
The Louisville-based parent of such companies as Kentucky Fried Chicken and Taco Bell paid no net corporate income taxes to states over the past three years, even as it generated more than a billion dollars in profits for shareholders, according to a new report.
Yum Brands is one of 68 companies nationwide that paid no state corporate income tax in at least one of the past three years, according to "Corporate Tax Dodging in the Fifty States, 2008-2010" a report released Wednesday by economic justice advocacy groups.
Twenty of those companies averaged a tax rate of zero or less during the 2008-10 period, including Yum Brands, according to the report by the Institute on Taxation and Economic Policy and Citizens for Tax Justice.
"The report's findings are troubling," said Jason Bailey, director of the Kentucky Center for Economic Policy, which also helped produce the report. "At a time of record corporate profits, many large corporations are avoiding paying their fair share for the public services from which they benefit. By deepening Kentucky's budget woes, corporate tax avoidance directly harms our ability to provide quality education, improve health and build a foundation for a strong economy."
Yum Brands officials did not return calls seeking comment on Wednesday. According to the report, Yum paid a state income tax rate of negative 2 percent in 2008, 0.3 percent in 2009 and 0.9 percent in 2010, for a three year rate of negative 0.4 percent.
Bailey said state corporate income taxes are a small percentage of a company's costs, but are very important to Kentucky's budget. Last fiscal year, about $300 million of the state's $8.76 billion in General Fund receipts came from corporate income taxes.
The report also showed that three other Fortune 500 companies in Kentucky Ashland, Humana and Kindred Healthcare paid a three-year state income tax rate of less than 4 percent.
The national average for a state corporate tax rate is 6.2 percent, according to the report. Of the 265 Fortune 500 companies studied in the report, the average state corporate income tax rate paid was 3 percent.
Nationally, the reasons for declining state corporate tax rates are varied and complex, including lower federal tax rates, economic development incentives that grant tax breaks, and the ability of multi-state corporations to legally shift profits from one state to another.
The advocacy groups examined filings with the U.S. Securities and Exchange Commission to ascertain tax rates, although it could not discern exactly what each corporation did to lower its tax rate.
To read the complete article, visit www.kentucky.com.