[ FedEx and Nike are among those found to have avoided U.S. tax
liability for three straight years.] [[link removed]]

NO FEDERAL TAXES FOR DOZENS OF BIG, PROFITABLE COMPANIES  
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Patricia Cohen
April 2, 2021
The New York Times
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_ FedEx and Nike are among those found to have avoided U.S. tax
liability for three straight years. _

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

 

Just as the Biden administration is pushing to raise taxes
[[link removed]] on
corporations, a new study finds that at least 55 of America’s
largest paid no taxes
[[link removed]] last
year on billions of dollars in profits.

The sweeping tax bill
[[link removed]] 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 [[link removed]], 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.

Source: Institute on Taxation and Economic Policy 

The New York Times

Companies’ tax returns are private, but publicly traded corporations
are required to file financial reports
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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.

A provision in the 2017 tax bill allowed businesses to immediately
write off the cost of any new equipment and machinery.

The $2.2 trillion CARES Act, passed last year to help businesses and
families survive the economic devastation wrought by the pandemic,
included a provision that temporarily allowed businesses to use losses
in 2020 to offset profits earned in previous years, according to the
institute.

DTE used that provision to get an accelerated refund of credits
representing $220 million of previously paid alternative minimum
taxes, the company said.

FedEx, too, took advantage of provisions in the CARES Act, using
losses in 2020 to reduce tax bills from previous years when the tax
rate was higher. It said those provisions “helped companies like
FedEx navigate a rapidly changing economy and marketplace while
continuing to invest in capital, hire team members, and fund employee
pension plans.”

The report is the latest fodder in a debate over whether and how to
revise the tax code. Policymakers, business leaders and tax experts
argue that many deductions and credits are there for good reason —
to encourage research and development, to promote expansion and to
smooth the ups and downs of the business cycle, taking a longer view
of profit and loss than can be calculated in a single year.

“The fact that a lot of companies aren’t paying taxes says there
are a lot of provisions and preferences out there,” said Alan D.
Viard, a resident scholar at the American Enterprise Institute, a
conservative research group. “It doesn’t tell you whether
they’re good or bad or indifferent. At most it’s a starting point,
certainly not an ending point.”

He pointed out that the Biden administration itself supported tax
credits for green energy investments.

Backers of more aggressive policies on corporate taxes pointed to the
study’s findings. “This isn’t rocket science: giant corporations
that report billions in profit shouldn’t be able to pay $0 in
federal taxes,” Senator Elizabeth Warren, Democrat of
Massachusetts, said on Twitter
[[link removed]].

The Institute on Taxation and Economic Policy has been issuing a form
of its report on corporate taxes for decades. During the 2020
presidential campaign, its findings grabbed center stage,
with Democratic candidates
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it to argue the tax code was deeply flawed.

Tax avoidance strategies include a mix of old standards and new
innovations. Companies, for example, saved billions by allowing top
executives to buy discounted stock options in the future and then
deducting their value as a loss.

The Biden administration announced this week that it planned
to increase the corporate tax rate
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28 percent, and establish a kind of minimum tax that would limit the
number of zero-payers. The White House estimated that the revisions
would raise $2 trillion over 15 years, which will be used to fund the
president’s ambitious infrastructure plan
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Supporters say that in addition to yielding revenue, the rewrite would
help make the tax code more equitable, requiring individuals and
companies at the top of the income ladder to pay more.
But Republicans have signaled
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the tax increases in the Biden proposal — which Senator Mitch
McConnell of Kentucky, the minority leader, called “massive” —
will preclude bipartisan support.

Referring to the proposed revisions, Matt Gardner, a senior fellow at
the taxation institute, said, “If I were going to make a list of the
things I would want the corporate tax reform to do, this outline
tackles all these issues.”

Deductions and exemptions wouldn’t disappear, but other changes like
the minimum tax would reduce their value, he said.

_Patricia Cohen covers the national economy. Since joining The Times
in 1997, she has also written about theater, books and ideas. She is
the author of “In Our Prime: The Fascinating History and Promising
Future of Middle Age.” @PatcohenNYT
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