IRS Corporate Tax Data Confirms Lousy Economy

In a recently released publication, IRS has provided data and filing statistics for corporate income tax returns with accounting periods that ended between July 2008 and June 2009. The statistics generally showed a decline in assets, receipts, profits, and income between tax years (TYs) 2007 and 2008.

The corporate summary statistics included the following:

·        Total assets. The total assets reported for active corporations suffered a 5.8% decrease from TY 2007, down to $76.8 trillion. The finance and insurance sector had the greatest net decrease, from $39.5 trillion to $33.9 trillion (-14.1%). The information sector's $633 billion drop was the largest percentage change (-20.4%). As noted, corporations had $76.8 trillion of total assets for TY 2008. Amazingly, 0.04% of the corporations hold $62.2 trillion of those assets.

·        Total receipts. The total receipts from corporate operations and investments fell from $28.8 trillion to $28.6 trillion (-0.6%), despite a 2.07% increase in business receipts from $24.2 trillion in TY 2007 to $24.7 trillion in TY 2008. The overall reduction was largely due to decreases in investment income from that received in TY 2007, notably in interest (-17.9%) and capital gains (-55%). The largest decrease in total receipts was suffered by the finance and insurance sector, which fell $459.1 billion (-11.1%).

·        Total deductions. Total deductions rose from $27 trillion in TY 2007 to $27.7 trillion in TY 2008 (+2.6%). Within this category, deductions for cost of goods sold rose from $15.5 trillion to $16.1 trillion (+3.7%).

·        Pre-tax profits. Corporate pre-tax profits (i.e., net income) decreased from $1.84 trillion in TY 2007 to $984.3 billion in TY 2008 (-46.4%). If pass-through entities are excluded from this computation, the revised figures show a decrease from $1.06 trillion to $388.7 billion (-63.4%).

·        Total income tax. The total income tax reported decreased from $433.5 billion in TY 2007 to $339.7 billion in TY 2008 (-21.6%).  The amount of corporate tax paid to the U.S. government decreased from $331.4 billion in TY 2007 to $228.5 billion in TY 2008 (-31%).

·        Pass-through entities. Of the 5.8 million active corporations for TY 2008, approximately 4.1 million were pass-through entities that pay little or no corporate-level federal income tax. The pre-tax profits of pass-through entities fell $180.4 billion during 2008 (-23.2%).