Clean Up Your Portfolio: Ditch the Dirty Stockshttp://www.fool.com/investing/general/2012/02/03/clean-up-your-portfolio-ditch-the-dirty-stocks.aspx Alyce Lomax
February 3, 2012
America's fiscal situation is a shambles, and our marketplace is fraught with dysfunction. We've let dirty dealers get away with far too much. Many of those corrupt players are the "corporate people" whose wallets were loosened by the Supreme Court Citizens United case two years ago.
We could define "dirty players" in many ways, but one of the ways our market is distorted is by the torrent of shareholder capital that is deployed in an extremely unproductive way: corporations lobbying for political advantage in an increasingly false marketplace.
The report identified 280 profitable Fortune 500 firms that paid an effective tax rate of 18.5%, about half of the statutory 35% corporate tax rate, and raked in $223 billion in tax subsidies. Those companies shelled out $2 billion on lobbying related to taxation and other issues between 2008 and 2010.
The "Dirty Thirty" were particularly aggressive at both lobbying and avoiding taxes. These 30 companies took $10.6 billion in tax rebates and avoided the $67.9 billion in taxes they would have paid had they been subject to the 35% tax rate.
Hey, big spender
Washington, D.C.-based utility Pepco (NYSE: POM ) isn't just "dirty," it's hated, too. The American Customer Satisfaction Index gave it a dubious distinction; it was named "the most hated company in America" last summer because it drives its customers "berserk."
Pepco happens to reside at the very top of the Dirty Thirty list. Pepco shelled out $3.8 million in lobbying dollars while enjoying a negative 57.6% tax rate. Having also enjoyed $816.7 million in tax subsidies, it generated $882 million in profits. You'd think its service wouldn't stink so bad given the cushy deal it has at the expense of everyday Americans, right?
General Electric (NYSE: GE ) , not surprisingly, came in at No. 2. It shelled out a mind-boggling $84.4 million in lobbying expenses, and reaped $8.4 billion in tax subsidies. It also happens to have 14 subsidiaries in tax havens.
GE landed in the tax avoidance spotlight last year, and defended itself by saying it did pay taxes, and plenty of them, too ($2.7 billion). It didn't clarify that those were worldwide taxes. Here at home, maybe GE brings good things to living, all while living relatively scot-free.
The list included some big, big spenders. Verizon (NYSE: VZ ) , Boeing (NYSE: BA ) , and PG&E (NYSE: PCG ) all coughed up some serious cash on lobbying expenses. Verizon and Boeing both shelled out $52.3 million, and PG&E expended a lot of "energy" in this area, spending $79 million.
Dirty stocks, deteriorating businesses