19 of America’s Biggest Companies Pay Little – Or Zero – Income Taxes: “The Tax Code Is Broken”

Nineteen of America’s largest corporations paid little or no taxes last year, according to a new analysis of financial documents from the liberal research center Center for American Progress (CAP). This occurs at a time when American companies are enjoying their most profitable year since 1950, thanks to government support as well as an increase in consumer spending how the pandemic subsided.

Businesses received a big 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 CAP analysis found that many large companies are paying far less than the statutory 21% tax rate – sometimes even taking their tax rate below zero, effectively getting a refund – thanks to loopholes like deductions and write-offs.

The findings come as the Biden administration is pushing for a new minimum corporate tax of 15% — a base rate that advocates say would help ensure profitable companies pay their fair share.

“Our corporate tax code is broken when some of the largest and most profitable companies in the country are paying little or no tax,” Seth Hanlon, a senior fellow at CAP and co-author of the report, told CBS MoneyWatch.

Critics note that corporations often redirect profits to shareholders through share buybacks and dividends, bolstering investor finances but not necessarily helping ordinary workers. About 9 out of 10 Americans who earn more than $100,000 own stock, either directly or indirectly through retirement plans; but only 2 in 10 with earnings below $35,000 have investments, according to Pew Research.

Corporations that paid little to no taxes in 2021 include some of the country’s biggest companies such as Amazon.com, AT&T, Charter Communications and AIG, according to the report, which analyzed financial records of Fortune 100 companies.

To be sure, corporations aren’t breaking the law by using loopholes to cut their taxes, but it does underscore 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.”

“Significant” local taxes

Charter Communications said in a statement to CBS MoneyWatch that its low federal tax burden is due to $40 billion in technology and infrastructure investments. This has led to taxes being deferred for future payment, as well as a lowering of the general tax burden, he said.

“Charter pays significant income taxes in most state and local jurisdictions and will be a significant contributor of federal cash taxes this year,” the telecommunications company said.

Insurance giant AIG pointed to a 2021 regulatory filing that stated its effective tax rate on continuing operations was 18% for that year. CAP analysis does not include deferred taxes, which companies generally report as part of their current effective tax rate, nor does it include foreign taxes.

Amazon said its US taxes “reflect our investments, employee compensation and current tax laws.”

“In 2021, we recorded $2.3 billion in federal income tax expenses, $5.2 billion in other federal taxes, and more than $4 billion in state and local taxes of all kinds,” said a spokesperson. -voice in statement. We also collect an additional $22 billion in sales tax for US states and locations.”

A spokesperson for chemical maker Dow disputed CAP’s findings, saying the report “discharacterizes Dow’s tax reports simply by considering the company’s current tax expense for 2021 as a percentage of domestic revenue for the same year.” The company complies with all tax laws, both in the US and internationally, the company said.

The spokesperson added: “In doing so, it disregards deferred taxes, which CAP recognizes, but CAP’s analysis of taxes paid is further skewed (reduced) by tax adjustments related to prior years and therefore have no nothing to do with Dow’s 2021 domestic revenue.”

Corporate tax rates in earlier times were much higher, noted Hanlon. “If you look at it historically, companies have paid much higher rates — both the nominal rate and the effective rates have been much higher in previous decades and dropped even further in 2017,” he said. “It wasn’t always like this.”

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