19 major U.S. corporations pay little to no tax, report finds
Nineteen of America’s largest corporations paid little or no taxes last year, according to a new analysis of financial records from the liberal think tank Center for American Progress (CAP). It comes as U.S. businesses enjoyed their most profitable year since 1950, thanks to government support as well as increased consumer spending as the pandemic subsided.
Corporations received a major tax break in 2017 when President Trump signed the Tax Cuts and Jobs Act, which lowered the corporate tax rate from 35% to 21%. But PAC analysis found that many large companies are paying far less than the 21% statutory rate – sometimes even cutting their tax rate below zero, thus getting a refund – thanks to loopholes such as deductions and write-offs.
The findings come at a time when the Biden administration is pushing for a new minimum corporate tax of 15% — a base rate that supporters say would help ensure profitable businesses pay their fair share.
“Our corporate tax code is violated when some of the largest and most profitable companies in the country pay little or no taxes,” Seth Hanlon, principal investigator at CAP and co-author of the report, told CBS MoneyWatch.
Critics note that companies often redirect profits to shareholders through stock buybacks and dividends, bolstering investors’ finances but not necessarily helping rank-and-file workers. About 9 in 10 Americans who earn more than $100,000 own stocks, either directly or indirectly through retirement plans; but only 2 in 10 with incomes below $35,000 have investments, according to Pew Research.
Companies that paid little or no taxes in 2021 include some of the nation’s largest corporations, such as Amazon.com, AT&T, Charter Communications and AIG, according to the report, which analyzed financial records from Fortune companies. 100.
Granted, corporations aren’t breaking the law by using loopholes to cut taxes, but it underscores the need for reform, Hanlon said. “The fact that there are so many holes in the corporate tax undermines the overall fairness of the tax code.”
“Important” local taxes
Charter Communications said in a statement to CBS MoneyWatch that its low federal tax burden was due to $40 billion in investments in technology and infrastructure. This led to a deferral of taxes for future payment, as well as a lower overall tax burden, he said.
“Charter pays significant income taxes in most state and local jurisdictions and will be a large federal cash taxpayer this year,” the telecommunications company said.
Insurance giant AIG pointed to a 2021 regulatory filing showing its effective tax rate on continuing operations was 18% that year. CAP analysis does not include deferred taxes, which companies often self-report as part of their current effective tax rate, or foreign taxes.
Amazon said its U.S. taxes “reflect our investments, employee compensation, and applicable tax laws.”
“In 2021, we reported $2.3 billion in federal income tax expenditures, $5.2 billion in other federal taxes, and more than $4 billion in state and local taxes of all types. “, a spokesperson said in a statement. We also collected an additional $22 billion in sales taxes for US states and localities.”
A spokesperson for chemical maker Dow disputed the CAP’s findings, saying the report “misrepresents Dow’s tax reporting by simply taking the company’s current tax burdens for 2021 as a percentage of national income for the same year. “. The company complies with all tax laws, both in the United States and abroad, the company said.
The spokesperson added: “In doing so, it does not take into account deferred taxes, which CAP acknowledges, but CAP’s analysis of taxes paid is further skewed (reduced) by tax adjustments related to prior years and therefore has nothing to do with Dow’s domestic revenue in 2021.”
Corporate tax rates in previous eras were much higher, Hanlon noted. “If you look historically, companies have paid much higher rates — the nominal rate and the effective rates were much higher in previous decades, and they went down again in 2017,” he said. “It wasn’t always like this.”
First published on April 26, 2022 / 2:30 PM
© 2022 CBS Interactive Inc. All rights reserved.