No Federal Taxes for Dozens of Big, Profitable Companies
Twenty-six Fortune 500 companies, including FedEx, paid no federal income tax for the last three years, a study found.Credit...Hunter Kerhart for The New York Times
FedEx and Nike are among those found to have avoided U.S. tax liability for three straight years.
[Ed.: this was published Oct. 7, 2021, but remains even more relevant today]
Just as the Biden administration is pushing to raise taxes on corporations, a new study finds that at least 55 of America’s largest paid no taxes last year (2020 - Ed.) on billions of dollars in profits.
The sweeping tax bill passed in 2017 by a Republican Congress and signed into law by President Donald J. Trump reduced the corporate tax rate to 21 percent from 35 percent. But dozens of Fortune 500 companies were able to further shrink their tax bill — sometimes to zero — thanks to a range of legal deductions and exemptions that have become staples of the tax code, according to the analysis.
Salesforce, Archer-Daniels-Midland and Consolidated Edison were among those named in the report, which was done by the Institute on Taxation and Economic Policy, a left-leaning research group in Washington.
Twenty-six of the companies listed, including FedEx, Duke Energy and Nike, were able to avoid paying any federal income tax for the last three years even though they reported a combined income of $77 billion. Many also received millions of dollars in tax rebates.
Escaping 3 Years of Taxes
These are Fortune 500 companies with enough public information to show that they were profitable in 2018, 2019 and 2020 and had a total effective federal tax rate of zero or less over those three years, according to data compiled by the Institute on Taxation and Economic Policy.
Companies’ tax returns are private, but publicly traded corporations are required to file financial reports that include federal income tax expense. The institute used that data along with other information supplied by each company on its pretax income.
Catherine Butler, a spokeswoman for Duke Energy, responded in an email that the company “fully complies with federal and state tax laws as part of our efforts to make investments that will benefit our customers and communities.”
She pointed out that the bonus depreciation, intended to encourage investment in areas like renewable energy, “caused Duke’s cash tax obligations to be deferred to future periods, but it did not eliminate them.” According to a filing at the end of 2020, Duke has a deferred federal tax balance of $9 billion that will be paid in the future.
DTE Energy, a Detroit-based utility that was also found to have paid no federal taxes for three years, said major investments in modernizing aging infrastructure and new solar and wind technologies were the primary reasons last year. “For utilities, the benefit of these federal tax savings are passed on to utility customers in the form of lower utility bills,” it said in a statement.