Nineteen of the largest U.S. corporations paid little or no tax last year, according to a new analysis of the financial presentations of the Center for American Progress (CAP). This comes when American companies enjoyed theirs most profitable year since 1950, thanks to government support and rising consumer spending as the pandemic eased.
Businesses received a significant tax cut in 2017 when President Trump signed the Tax and Jobs Cuts Act, which reduced the corporate tax rate from 35% to 21%. But the CAP analysis found that many large companies pay much less than the legal rate of 21%, sometimes even driving their tax rate below zero, effectively getting a refund, thanks to loopholes such as deductions and cancellations.
The findings come at a time when the Biden administration is pushing for a new minimum business tax of 15%, a benchmark rate that advocates say would help ensure that profitable businesses pay their fair share.
“Our corporate tax code breaks when some of the largest and most profitable businesses in the country pay little or no taxes,” Seth Hanlon, a senior CAP member and co-author of the report, told CBS MoneyWatch.
Critics point out that corporations often redirect profits to shareholders through share buybacks and dividends, strengthening investors' finances, but not necessarily helping grassroots workers. About 9 out of 10 Americans earn more than $ 100,000 in their own stock, either directly or indirectly through retirement plans; but only 2 out of 10 with incomes below $ 35,000 have investments, according to Pew Research.
Corporations that paid little or no tax in 2021 include some of the largest companies in the country, such as Amazon.com, AT&T, Charter Communications and AIG, according to the report, which analyzed the financial presentations of Fortune 100 companies.
Of course, corporations are not breaking the law by using loopholes to cut their taxes, but he stresses the need for reform, Hanlon said. "The fact that there are so many holes in corporate tax undermines the overall fairness of the tax code."
"Important" local taxes.
Charter Communications said in a statement to CBS MoneyWatch that its low federal tax burden was due to $ 40 billion in technology and infrastructure investments. This caused taxes to be deferred for future payment, as well as a reduction in the overall tax burden, he said.
“Charter pays significant income taxes in most state and local jurisdictions and will be a significant federal taxpayer in cash this year,” the telecommunications company said.
Insurance giant AIG noted a 2021 regulatory filing that said its effective tax rate on continuing operations was 18% that year. The CAP analysis does not include deferred taxes, which companies often self-declare as part of their current effective tax rate, nor foreign taxes.
“If we look historically, corporations paid much higher rates - both the nominal rate and the effective rates were much higher in previous decades, and they fell even further in 2017,” Hanlon said. "It hasn't always been that way."
- In:
- Taxes
Add Comment