Charlotte-based Duke Energy is among 26 profitable Fortune 500 companies that didn’t pay any federal income taxes from 2008 to 2012, according to a new report on corporate taxes.
Among all industries, gas and electric utility companies had the lowest effective rate, at 2.9 percent, benefiting from a tax break that comes from taking accelerated depreciation on the capital investments they make in their plants, according to the report. Duke said it will pay the federal taxes over the 30- to 40-year life of its projects.
Other companies that didn’t pay taxes on an aggregated basis during the period included General Electric, Verizon Communications and Boeing, the study by two nonpartisan research groups, Citizens for Tax Justice and the Institute on Taxation and Economic Policy, found.
Wells Fargo, which has an East Coast hub in Charlotte, was flagged for receiving the biggest tax subsidy over the five-year period, $21.6 billion, although it paid taxes in all of the five years except 2009. The bank said the study covered an unusual period for the bank in which losses from its Wachovia acquisition reduced its taxable income.
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Another Charlotte-based company cited in the report was industrial conglomerate SPX, which didn’t pay taxes in two of the five years.
Federal tax law, on paper, requires corporations to pay 35 percent of their profits in federal income taxes, but the groups found the actual rate was 19.4 percent after tax breaks and other deductions for the 288 companies covered by the report.
“A third of the companies paid less than 10 percent,” Bob McIntyre, one of the authors of the report, told the Observer. “It says if you’ve got lobbying muscle, your return on investment is very high.”
Duke, which has faced scrutiny in recent weeks for a Feb. 2 spill from a coal ash pond into the Dan River, posted profits of $9 billion from 2008 to 2012, but received tax rebates of $299 million, according to the study.
“Duke Energy, like all utilities, is a very capital intensive business,” Duke spokesman Tom Williams said. “Our federal taxes were lowered by bonus depreciation rules, temporarily put in place as a part of the 2009 federal stimulus to help create jobs.”
The rules allowed the company to expense a significant portion of its projects in the early years of their operation, he said, but the company will still pay federal taxes over their expected lifetime.
The company recently completed a $9 billion plant modernization program in which it retired coal plants and replaced them with more efficient and cleaner natural gas and coal units, Williams said. “Many of these projects,” he said, “were already planned and/or started before the 2009 recession.”
Williams also noted the report ignored the hundreds of millions of dollars in state and local taxes that Duke pays each year.
The report comes amid a new push in Congress by House Republicans to overhaul the tax code, although chances are slim for the plan going into effect, with House Speaker John Boehner, R-Ohio, distancing himself from the proposal.