NEW YORK Just as President Joe Biden pushes to raise corporate taxes to help pay for his infrastructure plan, a report by a Washington political group highlights the fact that many companies pay nothing despite big profits before taxes.
More than 50 of America’s biggest companies paid nothing in federal income tax last year, and many got discounts, even though they as a group reported nearly $ 40.5 billion in profits. before taxes, according to the Institute on Taxation and Economic Policy. The group believes that the tax system should generate more tax revenue.
The 55 companies named in the report released on Friday cross many industries, from agriculture to high-tech, and include big names like Nike and Duke Energy. The report says businesses have taken advantage of the breaks that were preserved or expanded during President Donald Trump’s 2017 tax code overhaul, as well as the economic bailout Washington adopted last spring.
As part of the 2017 tax cut, the corporate profit rate is 21%. But there are many tools that companies can use to avoid taxes, such as waiving expenses related to stock options they grant to their CEOs and other executives.
Businesses can also use a range of available tax credits by making investments that the U.S. government is trying to encourage, in the same way that individuals can get tax breaks for saving in a retirement fund or making their home better. energy efficient.
At Duke Energy, one of the nation’s largest utility owners, the company recorded $ 110 million in tax credits last year for producing renewable energy from wind power facilities, for example. This and other credits helped the Charlotte, North Carolina-based company achieve a $ 281 million rebate in federal income taxes last year, after it reported $ 826 million in U.S. income. before taxes from continuing operations.
Lawmakers crafted these tax policies to encourage corporate taxpayers to invest in economic growth, infrastructure and renewable energy, said Duke spokeswoman Catherine Butler.
She said federal tax rules allow Duke to delay certain cash payments for taxes in the future, but not eliminate them. The company had around $ 9 billion in deferred tax liabilities at the end of 2020, which Butler says will become future tax payments over time.
Nike, meanwhile, used a federal tax credit intended to encourage business research and development. The sportswear giant also took advantage of tax benefits related to stock-based compensation for its fiscal year which ended on May 31. In total, he received $ 109 million in federal tax rebates after reporting total pre-tax income of $ 2.9 billion for the year.
Officials at Nike, which is based in Beaverton, Oregon, could not be reached immediately for comment.
Most CEOs of large public corporations do not risk jail time to evade paying taxes when Congress provides them with so many legal means to do so, said Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy. .
The $ 2.2 trillion bailout that Washington approved last spring to ease the pain of the pandemic has opened more avenues for businesses to limit their federal tax bills. The law allowed businesses to take reported losses from 2018 to 2020 and use them to reduce tax liabilities from previous years, even those where income was taxed at higher rates.
When President Trump signaled his intention to cut corporate taxes in 2017, he and Congress had the opportunity to narrow the many loopholes that have allowed businesses to avoid tax on much of their business. incomes since the early 1980s, the report’s authors, Wamhoff and Matthew Gardner, wrote. But now, with three years of data released on the effective tax rates paid by publicly traded companies, it is clear that the Trump law has not significantly reduced corporate tax evasion and may even reduce it. to encourage.
In total, companies paid nearly $ 243 billion in total tax revenue in 2019, down 30% from five years earlier.
One in three companies with more than $ 1 billion in assets paid no federal income tax from 2013 to 2017, according to a report prepared last year by staff of the House of Representatives Joint Committee on Taxation. For small businesses with assets of less than $ 1 billion, two out of three corporations have no federal income tax in any given year.
In 2019, corporate taxes represented 3.9% of total U.S. tax revenue, according to the Tax Foundation, a group that wants tax policies that lead to greater economic growth. This compares to an average of 9.6% in the economies of the Organization for Economic Co-operation and Development.
That number could rise if Biden could push through the corporate tax changes he suggested to help pay for his $ 2.3 trillion plan to renew the country’s infrastructure.
A proposal to raise the corporate tax rate to 28% may not make much of a difference for businesses that use tax credits and other tools to avoid paying taxes. But Biden’s plan to enact a minimum tax of 15% on the income that corporations report to their investors, called accounting income, could force some zero-tax corporations to start paying, depending on how it’s done.
Republicans in Congress have also previously resisted corporate tax increases, saying they would hurt the U.S. economy.
Sweet reported from Charlotte, North Carolina.
Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
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