GAO: Bulk of Firms Pay No Taxes

A report by the Government Accountability Office found that 72 percent of foreign corporations and 57 percent of U.S. companies paid no federal income taxes for at least one year between 1998 and 2005.

The report, which did not name companies, found that corporations avoided paying taxes through a variety of reasons, including operating at a loss, tax credits, and the use of techniques to shift income to low-tax countries.

More than half of foreign companies and about 42 percent of U.S. firms paid no federal income taxes for two or more years during the period that was tested, according to the report, which was commissioned by senators Carl Levin (D-MI) and Byron Dorgan (D-ND).

In a statement Dorgan called the report "a shocking indictment of the current tax system." Levin said it made it clear that "too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share here in the United States."

The study showed about 28 percent of large foreign companies doing business in the United States paid no federal taxes in 2005.