Not just Amazon: 60 big companies paid $0 in taxes under Trump law
Not just Amazon: 60 big companies paid $0 in taxes under Trump law
Kristin Myers 18 hours ago
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Big businesses are faring better than ever under the Trump era tax law, the Tax Cuts and Jobs Act (TCJA).
According to analysis from the Institute on Taxation and Economic Policy (ITEP), 60 Fortune 500 companies avoided paying all federal income tax in 2018 (with their total average effective tax rate being roughly -5%).
That’s more than three times the number of companies that avoided paying corporate taxes on average from 2008 to 2015. During that period, 18 companies managed to pay 0% or less (with their total average effective tax rate over 8 years being roughly -4%).
“There are a lot of breaks and loopholes that allow a company not to pay,” Steve Wamhoff, ITEP’s Director of Federal Tax Policy, told Yahoo Finance. “People, when they think of tax reform, think the government is going to fix the tax code and get rid of breaks and loopholes and get rid tax dodging. What we got at the end of 2017 was not that. It was the opposite of that. The Tax Cuts and jobs act left a lot of special breaks and loopholes in place and created some new ones.”
That’s the lowest effective tax rate since at least 1947.
‘These companies enjoyed a net corporate tax rebate’
Of all 60 companies paying taxes for 2018, the first full year under the TCJA, Amazon (AMZN) topped the list with the largest portion of income. In 2018, Amazon paid $0 in taxes on record profit of $11 billion. 2018 was the second year in a row that the e-commerce giant was able to avoid paying taxes.
Amazon is joined on the list by other big companies raking in big profits, including Delta Airlines (DAL), Chevron (CVX), Netflix (NFLX), and General Motors (GM).
“Instead of paying $16.4 billion in taxes at the 21 percent statutory corporate tax rate,” ITEP noted, “these companies enjoyed a net corporate tax rebate of $4.3 billion.”
Under TCJA, Trump’s new tax law cuts the corporate tax rate from 35% to 21%. And some big businesses that did end up paying tax in 2018 paid far less than that.
‘They should really be paying taxes’
While not illegal, corporations are often able to take advantage of a creative cocktail of tax credits, loopholes, and exemptions.
“It’s hard to know exactly what they’re doing,” Wamhoff said when discussing Amazon. “In their public documents they don’t lay out their tax strategy. So it’s unclear exactly which breaks [the company is taking advantage of]. They vaguely say tax credits. One could think of many different ways a corporation could do this, like the depreciation breaks which were expanded under TCJA.”
Despite the new tax law, Wamhoff noted, this is nothing new. Several corporations have avoided paying federal income tax throughout the years, he says.
“These companies have been consistently profitable,” he explained. “And they should really be paying taxes.”
Elizabeth Warren, the Democratic Senator and presidential candidate wants to end this, proposing a new corporate tax that would pull in an estimated $1 trillion in revenue. In a Medium post, Warren’s team stated that the ‘Real Corporate Profits Tax’ would only apply “to companies that report more than $100 million in profits — about the 1200 most profitable firms in the country last year. That first $100 million is left alone, but for every dollar of profit above $100 million, the corporation will pay a 7% tax. Any company profitable enough to hit the Real Corporate Profits Tax will pay that tax in addition to whatever its liability might be under our current corporate tax rules.”
Team Warren added that the tax would “make our biggest and most profitable corporations pay more and ensure that none of them can ever make billions and pay zero taxes again.”
Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.
