Companies Pay Zero in Taxes As Nation's Roads Crumble
A new report shows companies like Nike and FedEx paid no taxes on billions of dollars in income
Earlier this week, President Joe Biden released a $2 Trillion infrastructure and jobs plans. The massive project would rebuild roads and bridges, build out a national car charging network, and expand broadband access to all Americans. President Biden has said that the plan could create up to 18 million jobs with most of them being union.
To pay for the plan, Biden has proposed an increase to the corporate tax rate. Biden would repeal the Trump tax cut, raising the corporate tax rate to 28% an increase from the current 21% tax on company incomes. They would also institute new measures designed to stop companies from offshoring profits to countries with no corporate tax rates.
While Republicans are already running around the country saying that they will oppose the bill due to the tax increases reports show that many major profitable companies are not paying their taxes. A recent study cited by the White House found that 91 companies that are part of the Fortune 500 paid no taxes on US income in 2018. Another report cited by the NY Times identified 55 of these companies.
The report which was put together by the Institute on Taxation and Economic Policy (ITEP) found that companies like FedEx, Nike, and Duke Energy can use tax loopholes to avoid paying any federal income taxes for the last three years even though they reported a combined income of $77 billion. The report found that if just these 55 companies paid 21% on their 2020 incomes, they would have paid $8.5 billion in taxes last year.
Instead of paying taxes, many of these companies received money back from the government. For example, Nike reported $2.9 billion in US pretax income last year but paid no taxes, while receiving $109 million in tax rebates. FedEx also received $230 million in rebates while paying no taxes on $1.2 billion in US pretax income.
Thanks to tax cuts that favor big businesses, these companies have been able to use a series of tax breaks to lower their tax liability. These include a tax break for executive stock options, a tax break for investment in renewable energy, and a tax credit for federal research and experimentation. A provision in the Trump tax cuts also allows companies to immediately write off capital investments. The CARES Act also allows companies to write off previous years' losses to lower the current year's tax liability on current profits.
While these 55 companies were able to avoid paying taxes, one of the largest companies in the world, Amazon finally owed the US government money in 2020. After paying no taxes in the last two years, Amazon was hit with a $162 million tax bill, although that was just 1.2% of the $13.9 billion the company made in pre-tax income.
Under Biden’s tax plan, a global minimum tax of 21% would be imposed on US company’s overseas income and would eliminate certain loopholes that they say encourage companies to shift profits to tax haven countries. A 15% minimum tax on “book income” would also be enacted on companies that use loopholes to eliminate their tax liability.
Company tax returns are private, but these were publicly available because they are a part of the S&P 500 or the Fortune 500.