Verizon called tax dodger by CWA union, others

In response, Verizon says it complies with laws, has deferred some taxes

Verizon Communications was singled out as one of the nation's biggest tax dodgers by two citizen action groups and the Communication Workers of America (CWA) union on Tuesday.

CWA Chief of Staff Ron Collins joined representatives from Citizens for Tax Justice (CTJ) and Good Jobs First in a telecast to detail how Verizon has used the Reverse Morris Trust tax loophole to avoid $1.5 billion in taxes on the sale of landlines and other assets.

A Verizon spokesman later called the criticism "inaccurate and politically motivated" and said Verizon "fully complies with all the tax laws and pays its fair share of taxes."

Verizon has paid more than $7.5 billion over the past five years in state and federal income taxes alone, not including property taxes, payroll taxes and fees for rights-of-way, the spokesman added.

CTJ and the Institute on Taxation and Economic Policy released a report earlier this month noting that 78 of 280 U.S. corporations paid no federal taxes in at least one of the three years from 2008-2010.

Today, the groups said in a statement: "Verizon has proven itself to be one of the worst offenders, manipulating state revenue rules, seeking economic development subsidies and structuring its business and tax affairs to produce a negative income tax rate. Verizon has received state and local tax subsidies in at least 13 states."

The groups said that Verizon effectively paid a negative tax rate between 2008 and 2010, and was given a tax rebate of $1 billion from the U.S. Treasury. They put the negative tax rate at -2.9%.

But Verizon's spokesman, Bob Varettoni, said Verizon actually paid out $1.79 billion in taxes between 2008 and 2010 on earnings of $5.25 billion. Verizon has annually invested $16.5 billion in technology infrastructure, creating and sustaining jobs, he said.

"U.S. economic development policy allows for the payment of some taxes to be deferred," Varettoni added. "The CTJ treats deferred taxes as non-existent, [and] it does not account for the $1.79 billion in taxes Verizon paid out over the past three years despite deferrals."

Verizon also faulted the CTJ for an incorrect calculation on earnings for Verizon by including income that belongs to Vodafone, Verizon's partner in Verizon Wireless.

However, CWA's Collins said the concerns about Verizon are timely since the Congressional "Super Committee" is meeting on budget and tax issues. "Verizon doesn't use its tax avoidance gains to keep up its copper network or extend its fiber optic technology to cities like Boston, Baltimore, Buffalo or other communities, or create quality jobs," Collins said.

"It isn't negotiating a fair contract with the workers who have made this company so successful, but instead is demanding nearly $1 billion in givebacks and making sure that its top executives stay in the top 1% of Americans," Collins added. "That's why we say the [other] 99% are picking up Verizon's tax tab."

CWA joined another union in a strike against Verizon in August.

Notably, CWA also has endorsed the AT&T merger with T-Mobile USA on the grounds it will create 96,000 new U.S. jobs. That estimate has been criticized by Sprint and others who oppose the merger.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is

Copyright © 2011 IDG Communications, Inc.

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