At least 55 of America’s largest companies avoided federal taxation last year by using certain tax breaks, some of which had been revived during the pandemic.
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As many as 55 of the U.S.’ largest corporations did not pay any federal taxes on their 2020 profits, according to the Institute on Tax and Economic Policy (ITEP).
The companies, which include Con Edison, Dish Network, FedEx, HP, Nike and Salesforce, reportedly made almost $40.5 billion combined in U.S. pretax income last year. Because of tax breaks under the 2017 Tax Cuts and Jobs Act (TCJA) and the 2020 CARES Act, they have been able to avoid federal income taxation for years, ITEP’s report points out. Had the corporations paid the 21% federal tax rate for corporate profits, they would have shelled out $8.5 billion, it further adds.
The news comes as millions of Americans struggle to make ends meet during the pandemic. According to the U.S. Labor Bureau of Statistics, approximately 10 million people remain unemployed even as the national economy trends upwards.
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The ITEP study also found that federal tax avoidance among the companies “remained rampant” between 2008 and 2015 — well before the TCJA’s passage. Last year, more than a dozen of them, including Nike and Salesforce, allegedly used a tax break for executive stock options to reduce their income taxes. Nike, along with others like HP, also used federal research and experimentation credit to lower their taxes.
In fact, a number of companies received a combined $3.5 billion in tax rebates instead of paying federal taxes, the findings assert. Rather than paying anything on its nearly $2.9 billion of U.S. pretax income last year, Nike, for instance, recieved a $109 million tax rebate. FedEx also didn’t pay any taxes on its $1.2 billion of U.S. pretax income and received a $230 million rebate.
As ITEP notes, the CARES Act temporarily restored the companies’ ability to carry back losses — including those from as far as five years ago — and offset income taxed at the 35% tax rate that had been in effect before 2018. As a result, the 55 corporations that ITEP surveyed enjoyed more than $500 million of tax breaks alone from CARES’ temporary tax benefit, along with other perks, last year.