More than two dozen large American companies have made a collective domestic profit of $ 77 billion over the past three years, without any expectation of having to pay federal taxes on their reward immediately. In fact, they have not spent a single dollar on current federal taxes since Donald Trump promoted a massive tax cut for companies in the first year of his presidency, according to a new study.
Many of these same companies, together, paid billions of dollars in annual taxes before Trump’s presidency.
For example, Salesforce.com earned $ 4.2 billion in the past three years before taxes. But since 2018, the software company has not set aside any money to pay federal taxes, according to its records with securities regulators. In fact, Salesforce has registered $ 4 million in tax credits since 2018. In the three years prior to Trump’s tax cut, Salesforce earned much less, but spent far more taxes – $ 35 million over $ 500 million in profits .
A Salesforce spokesman did not respond to a question from CBS MoneyWatch about how much the company paid in taxes.
The liberal tendency study by the Institute of Taxation and Economic Policy arises at a time when the national debate is intensifying on whether companies pay their fair share in taxes. This week, President Joe Biden said he hopes to significantly raise corporate taxes to help pay for a $ 2 trillion plan to upgrade the nation’s infrastructure, which could cost the federal government trillions of dollars.
On Friday, Mr. Biden said that his infrastructure proposal it is an “investment of a generation in the future, paid for by asking large corporations, many of whom do not pay taxes, to pay their fair share”.
Earlier this week, Mr. Biden drew up a plan increase what American companies pay in federal taxes by $ 2 trillion over the next decade. It includes the imposition of a minimum corporate tax rate of 15% based on the revenue that companies report to investors.
How much in corporate taxes in the Biden plan?
If Biden’s plan had been in place, the 26 profitable companies highlighted in the ITEP study together would have paid at least $ 11.6 billion in federal taxes since 2018, instead of the nearly $ 5 billion in tax credits they collected in that period.
“There is already this suspicion that large corporations are not paying their fair share,” said Matthew Gardner, a senior member of ITEP and one of the study’s authors. “A discovery like this will support this view.”
While it is clear that companies are paying significantly less than before Trump’s tax cuts, it is less certain how much less a particular company is contributing in taxes. The reason: companies, as well as individuals, can maintain the privacy of their tax records and payments.
However, public companies that report their profits to investors must also offer in their financial reports a rough estimate of how much they will have to pay in taxes in the next 12 months and any tax expenses they may face in the future. They are also required to detail who these taxes are likely to be paid to, such as the federal government, a state or foreign governments.
The ITEP study focused on the current value of the federal income tax that companies listed on the S&P 500 stock index accounted for over the past three years. Accounting experts often say that this figure offers a pretty good estimate of what companies may have paid in federal taxes. Less usefully, the provisions of the 2017 tax reduction law made that number less reliable.
For example, ITEP has identified FedEx as a company that has not paid federal taxes in the past three years. O the delivery giant has already competed this claim, saying it pays annual federal income tax, although it refuses to disclose how much. FedEx’s financial statements show that its cash accounts – another way of measuring corporate profits – have fallen by $ 400 million due to tax payments in the past three years.
Extremely low tax rates
Still, what many American companies pay in taxes can cause envy among individual taxpayers. A recent financial process indicated that Zoom, whose revenues and profits increased during the coronavirus pandemic, had did not generate federal taxes in 2020 despite the videoconference company’s record profit.
According to a CBS MoneyWatch analysis of FactSet data, the average effective corporate tax rate for companies on the S&P 500 last year was just 18% – down from 23% in 2017. Notably, this is for all taxes paid. Note only the federal income taxes and effective rates for these companies are likely to be much lower.
Duke Energy, for example, has made profits in the United States before taxes of nearly $ 8 billion over the past three years. Duke not only paid zero federal taxes during that time, but also registered a federal income tax credit of just over $ 1.2 billion, according to ITEP.
In response to the study, Duke Energy told the New York Times that investments in renewable energy allowed it to delay, but not eliminate, its federal tax obligations. The company’s most recent annual financial report recorded a liability of $ 9 billion for future federal tax payments.
Other large companies that ITEP researchers said have not paid federal taxes in recent years, despite posting huge profits, include the TV and Internet provider Dish Network and sports equipment company Nike.
On Friday, in response to the study, Vermont Senator Bernie Sanders tweeted that a $ 120 pair of Nike Air Force 1 sneakers would cost more than the company had paid in taxes over the past three years.
A Nike spokesman did not respond to a request for comment.
ITEP has also identified 55 companies that have made money in the past, but who apparently have not paid any money in federal taxes on those profits. For example, the study said cable company Charter Communications earned $ 3.6 billion during the pandemic, but recorded a $ 7 million tax credit last year.
Charter Communications did not respond to a request for comment.