Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Dear Common Dreams Readers:
Corporations and billionaires have their own media. Shouldn't we? When you “follow the money” that funds our independent journalism, it all leads back to this: people like you. Our supporters are what allows us to produce journalism in the public interest that is beholden only to people, our planet, and the common good. Please support our Mid-Year Campaign so that we always have a newsroom for the people that is funded by the people. Thank you for your support. --Jon Queally, managing editor

Join the small group of generous readers who donate, keeping Common Dreams free for millions of people each year. Without your help, we won’t survive.

Trump Tax Cut

Demonstrators protest the then-proposed Tax Cuts and Jobs Act (TCJA), which was later signed into law by former President Donald Trump, at Trump Tower in New York City on November 21, 2017. (Photo: Spencer Platt/Getty Images)

73 Major Corporations Paid Just 5.3% Federal Tax Rate Between 2018 and 2020: Report

Thirty-nine other companies paid no federal corporate tax during the three-year period, in which they collectively reaped over $120 billion in profits.

Brett Wilkins

Thirty-nine U.S. corporations reaping over $120 billion in profits between 2018 and 2020—the first three years of the so-called "GOP tax scam"—paid no net federal income tax, or claimed refunds during that period, a report published Thursday by the Institution on Taxation and Economic Policy revealed.

"The 39 corporations that paid nothing over three years received $29.7 billion in corporate income tax breaks during that period."
—ITEP report

The report (pdf), entitled Corporate Tax Avoidance Under the Tax Cuts and Jobs Act, notes that while some of the 39 companies—all of them in the S&P 500 or Fortune 500—paid federal income tax in one or more of the years analyzed in the study, "their total federal income taxes for the three-year period were either $0 or a negative amount, meaning they received a refund from the IRS for taxes paid in previous years."

This, despite the firms' realization of $122 billion in collective profits during the 2018-20 study period. Those three years were the first years of the Tax Cuts and Jobs Act (TCJA), which was signed by former President Donald Trump in December 2017.

Additionally, the analysis found that 73 other profitable companies paid less than half of the 21% statutory federal corporate income tax rate under the TCJA from 2018 to 2020. These firms paid an effective rate of just 5.3% during the three-year period.

"The 39 corporations that paid nothing over three years received $29.7 billion in corporate income tax breaks during that period," ITEP notes, while "the 73 corporations that paid less than half the statutory corporate tax rate over three years received a combined $67.5 billion in corporate income tax breaks during that time."

The new analysis follows an April ITEP report revealing that 55 companies paid $0 in federal income taxes on a combined $40.5 billion in profits.

ITEP

According to the new report:

Among the 39 corporations that avoided paying federal income taxes over three years, T-Mobile reported the largest profits. It reported $11.5 billion in profits over this time but had a federal income tax liability of negative $80 million, meaning the company received $80 million in tax refunds...

Among the 73 corporations that paid less than half of the statutory rate are household names such as Amazon, Bank of America, Deere, Domino's Pizza, Etsy, General Motors, Honeywell, Molson Coors, Motorola, Netflix, Nike, Verizon, Walt Disney, Whirlpool, and Xerox—which all paid effective federal income tax rates in the single digits.

ITEP explains numerous ways in which corporations avoid paying taxes:

  • Accelerated depreciation allows companies to write off equipment costs more quickly than the equipment loses value, with the TCJA empowering businesses to immediately write off all the costs of such investments;
  • Some companies lower their tax burden by exploiting a tax break for executives' stock options;
  • Accelerated depreciation and stock option tax breaks enable companies to report lower earnings to the IRS than they report to shareholders, further lowering their tax liability; and
  • Companies often subsidize their research and development costs via R&D tax credits.

"It's clear that many companies are paying abysmally low effective tax rates even in the years when they pay something," senior ITEP fellow and report co-author Matthew Gardner said in a statement. "Looking at a single year tells us a lot, but when we look at corporate tax-paying habits over several years, we get a better sense of the scale of the problem. This makes a clear case for Congress to enact significant tax reforms."

Denounced by critics as the "GOP tax scam" and opposed by a majority of Americans at the time of its passage, the TCJA reduced the federal corporate income tax rate from 35% to 21%, allowed companies to write off certain capital investments for five years, increased the exemption amount for estate tax from $5 million to $10 million, and made it easier for U.S. corporations to avoid paying taxes on income earned abroad.

"President Biden's proposals would not solve all the problems with our tax system but they could significantly reduce the worst corporate tax avoidance we have identified."
—Steve Wamhoff, ITEP

As he signed the measure, Trump said that "corporations are literally going wild" over it, just moments after touting the legislation as "a bill for the middle class."

Hours after signing the bill, however, the former president reportedly told wealthy friends at his Mar-a-Lago resort in Palm Beach, Florida that "you all just got a lot richer."

Indeed, a 2019 report from the Economic Policy Institute and the Center for Popular Democracy showed that the TCJA "delivered big benefits to the rich and corporations but nearly none for working families."

The ITEP report notes that President Joe Biden "has proposed to raise the statutory federal corporate income tax rate from 21% to 28% and end or limit many of the breaks that allow corporations to avoid taxes."

According to a Morning Consult poll published in April, nearly two-thirds of U.S. voters favor higher taxes on businesses to pay for the Biden administration's $2.25 trillion infrastructure and employment legislative proposal.

An analysis published earlier this year by the Penn Wharton Budget Model showed that Biden's proposed 7% corporate tax hike would increase government revenue by $891.6 billion between 2022 and 2031, and by nearly $1.49 trillion between 2022 and 2036.

However, the president has angered progressives by reportedly signaling his openness to a smaller corporate tax increase—to 25% instead of 28%.

"President Biden's proposals would not solve all the problems with our tax system but they could significantly reduce the worst corporate tax avoidance we have identified," said Steve Wamhoff, director of federal policy at ITEP and report co-author.


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

"I'm sure this will be all over the corporate media, right?"
That’s what one longtime Common Dreams reader said yesterday after the newsroom reported on new research showing how corporate price gouging surged to a nearly 70-year high in 2021. While major broadcasters, newspapers, and other outlets continue to carry water for their corporate advertisers when they report on issues like inflation, economic inequality, and the climate emergency, our independence empowers us to provide you stories and perspectives that powerful interests don’t want you to have. But this independence is only possible because of support from readers like you. You make the difference. If our support dries up, so will we. Our crucial Mid-Year Campaign is now underway and we are in emergency mode to make sure we raise the necessary funds so that every day we can bring you the stories that corporate, for-profit outlets ignore and neglect. Please, if you can, support Common Dreams today.

 

'We Need Action': Biden, Democrats Urged to Protect Abortion Access in Post-Roe US

"The Supreme Court doesn't get the final say on abortion," Sens. Elizabeth Warren and Tina Smith wrote in a new op-ed.

Kenny Stancil ·


Motorist 'Tried to Murder' Abortion Rights Advocates at Iowa Protest, Witnesses Say

Although one witness said the driver went "out of his way" to hit pro-choice protestors in the street, Cedar Rapids police declined to make an arrest.

Kenny Stancil ·


'A Hate Crime': Oslo Pride Parade Canceled After Deadly Shooting at Gay Bar

A 42-year-old gunman has been charged with terrorism following what Norway's prime minister called a "terrible and deeply shocking attack on innocent people."

Kenny Stancil ·


'We WILL Fight Back': Outrage, Resolve as Protests Erupt Against SCOTUS Abortion Ruling

Demonstrators took to the streets Friday to defiantly denounce the Supreme Court's right-wing supermajority after it rescinded a constitutional right for the first time in U.S. history.

Brett Wilkins ·


80+ US Prosecutors Vow Not to Be Part of Criminalizing Abortion Care

"Criminalizing and prosecuting individuals who seek or provide abortion care makes a mockery of justice," says a joint statement signed by 84 elected attorneys. "Prosecutors should not be part of that."

Kenny Stancil ·

Common Dreams Logo