[link removed]

FAIR
View article on FAIR's website ([link removed])
'Some of Our Most Profitable Companies Are Not Contributing to Our Basic Needs' Janine Jackson ([link removed])


Janine Jackson interviewed Institute on Taxation and Economic Policy's Amy Hanauer about corporate tax avoidance for the April 16, 2021, episode ([link removed]) of CounterSpin. This is a lightly edited transcript.


ITEP: 55 Corporations Paid $0 in Federal Taxes on 2020 Profits

ITEP (4/2/21 ([link removed]) )

Janine Jackson: You probably aren't surprised to learn that Zoom made a lot of money this past year, though the fact that their profits rose more than 4,000% is remarkable. It seems like textbook capitalism: The company sold a better mousetrap, or at least a more popular one.

What, though, do we do with the fact that on its $660 million take, Zoom paid zero in federal taxes ([link removed]) ? What textbook is that from?

They aren't alone, of course; at least 55 of the country's largest corporations paid no federal income taxes, according to new research. They've figured out a game, but it's us that are getting played—not just as individuals, who have to pay our own taxes, but as a country that is constantly claiming that we can't afford various social goods, while handing billions of dollars back to companies whose profits are, after all, ultimately built on individuals and on social goods.

Joining us now to talk about that problem is Amy Hanauer. She's executive director at the Institute on Taxation and Economic Policy ([link removed]) , as well as Citizens for Tax Justice ([link removed]) . She joins us by phone from Washington, DC. Welcome to CounterSpin, Amy Hanauer.

Amy Hanauer: Thank you so much, Janine. It's great to be here.

JJ: “Them that’s got shall get” is an old story, but it's still wrong, and galling. These companies are making money hand over fist. So what's going on? What are they doing to get out of paying federal taxes?
Amy Hanauer of ITEP

Amy Hanauer: "we have a corporate tax code that is just riddled with loopholes that enable companies like this to get away with avoiding taxes."

AH: Yeah; thank you so much for that question. You're right. My organization, Institute on Taxation and Economic Policy, found ([link removed]) that 55 of the largest Fortune 500 and S&P 500 corporations paid zero in taxes despite being profitable in 2020. And, together, those 55 companies had $40.5 billion in income. If you looked at our statutory tax rate of 21%, you would think that they would have paid $8.5 billion, but instead they actually got $3.5 billion in rebates.

And your question is, how? Well, we have a corporate tax code that is just riddled with loopholes that enable companies like this to get away with avoiding taxes, in ways that really leave regular people responsible for a larger share of our tax payments, and leave us unable to pay for the things that our communities need.

JJ: Well, that's the question. It sounds like unfairness; it is unfairness. But is it illegal?

AH: That's a great question. And should you blame their accountants and their lawyers, or should you blame Congress? And I think the responsibility lies clearly with the lawmakers who have created a tax code that enables this kind of avoidance.

So we have a handful of tax loopholes that companies can use. One is, we have an unequal tax rate between profits earned overseas and profits earned here domestically. If that were made the same, a lot of this tax avoidance could be stopped in its tracks.

We have ways of compensating executives with stock options ([link removed]) that enable companies to tell their stockholders that they're highly profitable and earning one thing, but then allow them to tell the IRS that they are far less profitable and earning less, and reduce what they pay in taxes as a result.

So there are just a whole bunch of these kinds of loopholes. And I think it rests clearly with Congress and the president to close these loopholes and get a more rational tax system in place.

JJ: I wanted to just say, ITEP’s findings on corporate tax avoidance are based on available data, because the secrecy is rather the point, and that's part of the problem also, right?

AH: That's right. And, of course, you at FAIR have looked at this kind of issue ([link removed]) for a long time. But we could have more transparency. We could require, particularly for those overseas earnings, we could do a lot more to say that these corporations have to divulge more to the American public.

And I think a related issue is that we could just do a lot more to empower the Internal Revenue Service to be able to enforce the tax code, because they are underfunded, and every dollar that the IRS gets results in much more than a dollar in returns to the American people. So we could be more transparent, and we could do a better job of enforcing even the laws that we have, as well as fixing these laws.

JJ: Let me ask you a question about history. I know that ITEP has been measuring this for decades. So it didn't start with Trump, right? And also, there have been efforts to fix it, these loopholes, and how has that fared? Can you tell us a little bit about the history on this?

AH: The fact is that this has been a problem for a long time, under administrations of both parties, and it also got a lot worse ([link removed]) with the Trump tax regime. So of the 55 corporations that paid nothing, there are another 26—a 26-corporation subset of those—that have actually paid no taxes if you take all three years of the Trump tax regime combined. And the reason is that the Trump tax law lowered the tax rate, it failed to close loopholes, and it actually made the problem of overseas tax avoidance worse in a way that they said they were going to make it better. So it has been a problem under both parties, but it certainly got worse with the Trump tax law. And I think that's where we see some potential promise for reform going forward.

JJ: Let's talk about that. Are there things concretely that could be done now? And we understand that sometimes, you know, one measure, and then another measure, and then another—it doesn't have to necessarily be a sweeping thing. But are there things that could be done right now?

AH: Absolutely. As I mentioned, we think we ought to equalize the tax rate between profits earned offshore ([link removed]) and profits earned domestically. There's no reason why a corporation should be able to move jobs overseas, or move equipment overseas, and then pay a lower tax rate.

There's another challenge with depreciation ([link removed]) , where corporations are able to write off a lot of the costs of their equipment, and they're able to write it off very quickly—and that's another thing that the Trump tax law made worse. We think we ought to be able to depreciate equipment at the rate that it actually wears out, and that that's a much more rational way of doing things.

And then, as I mentioned, we could end the tax break for stock options that enables corporations to say they earn one thing to their shareholders and say something different to the American government.

So there are all of these fixes out there. And I think, actually, the Biden administration is taking quite a few of these on, in ways that are pretty encouraging, and that would be kind of a generational shift, Janine, that would be different from anything that I think we've seen in a long time of looking at these issues.

JJ: Is there anything you would call on reporters to maybe dig into more deeply, or to jettison as frameworks? Or is there anything you would like to shift in terms of media's way of addressing this set of issues?

AH: Yeah, absolutely. The Biden plan ([link removed]) raises the corporate tax rate from 21% to 28%; that will make a difference. And I know there's negotiations with some members of Congress, and of the Senate, that may change that.

He also raises the offshore tax rate. He doesn't equalize it, which is what my researchers recommend; but he does raise it about halfway back up. So the offshore tax rate will be 21% and the overall tax rate will be 28%.

And the other really great thing that I think the Biden plan does is it just simply imposes a minimum tax, so that if your accountants and attorneys are able to identify a bunch of loopholes, you still, as a corporation, would pay a minimum tax of 15% ([link removed]) on your book profits. So we think that would make a big, big difference. And we definitely think it's a ripe area for reporters to explore, because one of the challenges with our tax code is that most people don't understand it very well, including many members of Congress.

So it's exciting that the Biden administration wants to take this on. I think that they really get that just looking around, looking at the problems that we've had in the United States over the past year, and then recognizing that some of our very most profitable corporations are not contributing to our basic needs—that just doesn't add up, doesn't seem right.

JJ: We've been speaking with Amy Hanauer from the Institute on Taxation and Economic Policy and Citizens for Tax Justice. You can find them online at ITEP.org ([link removed]) and CTJ.org ([link removed]) . Amy Hanauer, thank you so much for joining us today on CounterSpin.

AH: Janine, it was great to talk to you.
Read more ([link removed])

© 2021 Fairness & Accuracy in Reporting. All rights reserved.
You are receiving this email because you signed up for email alerts from
Fairness & Accuracy in Reporting

Our mailing address is:
FAIRNESS & ACCURACY IN REPORTING
124 W. 30th Street, Suite 201
New York, NY 10001

FAIR's Website ([link removed])

FAIR counts on your support to do this work — please donate today ([link removed]) .

Follow us on Twitter ([link removed]) | Friend us on Facebook ([link removed])

change your preferences ([link removed])
Email Marketing Powered by Mailchimp
[link removed]
unsubscribe ([link removed]) .