More than 50 public companies paid less than $ 0 in federal income tax in 2020. Joe Raedle / Getty Images
Thanks to coronavirus aid packages and Trump-era tax cuts, 55 of the largest U.S. companies, including well-known names like Nike, FedEx and Salesforce, paid no federal income taxes in 2020, despite raising billions of dollars in profits, according to a report published Friday by the Institute of Taxation and Economic Policy (ITEP).
The report looked at publicly traded companies included in the Fortune 500 or the S&P 500 index. Collectively, the 55 companies earned more than $ 40 billion in pre-tax income in the U.S. last year, according to their financial statements. They would have paid a total of $ 8.5 billion in the year if they had paid the federal corporate income tax rate of 21%.
These companies not only paid zero income tax, but many of them also obtained generous tax cuts, resulting in steep negative effective tax rates. In an extreme example, Treehouse Foods, an Illinois-based food processing company, did not pay taxes on $ 8 million in profits in the United States in 2020, while receiving $ 96 million in rebates. The company’s effective tax rate for the year was -1,167.1%.
Even more worrying, 26 of the 55 companies, including FedEx, Nike and Salesforce, have not paid any federal income taxes for the past three consecutive years, since the Republican tax law came into force. Former President Donald Trump reduced the standard corporate tax rate from 35% to 21%.
The CARES Act also helped. The bill, passed last March, contained a “clearing” clause that allowed companies to use losses in 2020, 2019 and 2018 to offset profits made in previous years, resulting in a discount that reduced their 2020 taxes, according to the ITEP report.
“This means that the losses incurred in 2018, 2019 and 2020 can offset the taxable income at the highest rate of 35% in force before 2018”, explained the institute. “Taxing profits at a rate while allowing losses to produce savings at a higher rate is an invitation for companies to play, moving profits and losses from one year to another on paper to reduce their tax bills.
Although the CARES Act was designed to help businesses and families withstand the economic impact of the COVID-19 pandemic, many of the companies that benefited from it saw their stock prices and CEO pay soar in 2020, thanks to the stock market. expanding stocks.
Notable companies paying $ 0 or less of federal income tax in 2020:
FedEx
US profit in 2020: $ 1.2 billion
Tax paid: $ 0
Tax reduction: $ 230 million
Change in stock price in 2020: + 138%
2020 CEO payout: $ 11 million (30% below 2019)
Nike
US profit in 2020: $ 2.9 billion
Tax paid: $ 0
Tax cut: $ 109 million
Change in stock price in 2020: + 38%
2020 CEO payout: $ 53 million (278% increase over 2019)
Sales force
US profit in 2020: $ 2.63 billion
Tax paid: $ 0
Tax reduction: $ 12 million
Change in stock price in 2020: + 33%
2020 CEO payout: $ 26 million (9% below 2019)
HP
US profit in 2020: $ 861 million
Tax paid: $ 0
Tax reduction: $ 24 million
Change in share price in 2020: + 22%
2020 CEO payout: $ 12.5 million (73% increase over 2019)
Michaels
US profit in 2020: $ 322 million
Tax paid: $ 0
Tax reduction: $ 11 million
Change in stock price in 2020: + 61%
CEO compensation for 2020: undisclosed ($ 12 million in 2019)
DTE Power
US profit in 2020: $ 1.5 billion
Tax paid: $ 0
Tax reduction: $ 247 million
Change in stock price in 2020: -6%
2020 CEO payout: $ 11 million (29% increase over 2019)
