(New York) Just as President Joe Biden proposes to raise the corporate tax rate to support his infrastructure program, a report from the Public Policy Institute reveals that many large corporations do not pay any money despite profits before tax.
More than 50 of the largest US companies paid nothing in income tax last year, with many even receiving refunds despite huge pre-tax profits totaling nearly $ 40.5 billion. This is according to the document published by the institute on economic policies and taxes. The organization believes that the tax system should be adjusted to generate more income.
The 55 companies mentioned in the report released on Friday come from various economic sectors ranging from agriculture to high technology. You can see the names of Nike, Duke Energy, and more. According to the analysis, these companies benefited from the cuts they maintained or expanded by reforming former President Donald Trump first in 2017 and then last spring due to the pandemic.
According to the tax rules established in 2017, the corporate profit tax rate is 21%. But there are a number of ways companies can avoid paying, including reporting expenses like paid shares to their executives.
Large companies can also use the list of available credits, among other things by investing in sectors favored by the federal government. Just like people who invest in their retirement funds or work to make their homes greener, they can do this.
For example, Duke Energy, one of the largest commodity companies in the United States, has recorded $ 110 million in credits for renewable energy production from wind turbines. By adding a series of other credits, the Charlotte, North Carolina-based company was able to receive $ 281 million in federal tax refunds last year. All this after announcing a pretax profit of $ 826 million.
“The elected officials developed these tax policies to encourage companies to invest in economic growth, infrastructure and renewable energy,” commented Kathryn Butler, a spokeswoman for Duke Energy.
It added that the rules allowed the company to delay future tax payments without canceling them. The company collected about 9 billion tax deferred taxes at the end of 2020 that will be paid in the future.
For its part, Nike has used the provisions to boost research and development. The sports banner also leveraged other benefits to generate 109 million federal tax refunds. All this despite a pre-tax profit of $ 2.9 billion.
Executives at Nike, who are based in Beaverton, Oregon, could not be reached for comment.
The $ 2.2 trillion stimulus package Washington approved last spring to mitigate the impact of the pandemic has created new opportunities for companies to reduce their federal tax contribution.
In particular, they were able to carry forward the losses incurred between 2018 and 2020 over the previous fiscal years even if the tax rate was higher at that time.
In 2019, the total tax paid by U.S. corporations was $ 243 billion, or 30% less than five years ago.