Fiserv paid $0 in federal taxes
Report on 55 companies not alleging wrongdoing
Brookfield-based Fiserv recorded more than $1 billion in pre-tax income and paid zero in federal taxes, according to a report from the Institute on Taxation and Economic Policy.
The report, released April 2, states Fiserv recorded $1.1 billion in pre-tax income in 2020, received a $25 million federal tax rebate and had an effective tax rate of -2.3%.
The Institute on Taxation and Economic Policy reviewed the financial reports of some of the nation’s largest publicly traded companies in the most recent fiscal year. The companies on the list include numerous well-known corporations such as Nike and FedEx.
The report is not alleging any wrongdoing. However, it cites tax breaks in the Tax Cuts and Jobs Act, passed in 2017, and the CARES Act, enacted in 2020, as reasons companies are able to take advantage of such financial opportunities.
“For decades, the biggest and most profitable U.S. corporations have found ways to shelter their profits from federal income taxation,” the report said.
“Now, with most corporations reporting their third year of results under the new corporate tax laws pushed through by President Donald Trump in 2017, it is crystal clear that the (Tax Cuts and Jobs Act) failed to address loopholes that enable tax dodging, and may have made it worse.”
In response, Ann Cave, vice president of external communications for Fiserv, said the company “follows applicable tax regulations. In 2020, we carried forward net operating losses from the prior year, which is reflected in our 2020 tax rate.”
When asked about how much loss the company carried forward, Cave deferred to documents filed with the Securities and Exchange Commission.
The report states the CARES Act not only loosened the rules for treatment of losses in 2020 “but also retroactively for losses reported in 2018 and 2019, which have nothing to do with the pandemic.”
“Even worse, it allows corporations to carry back losses as far as five years. This means losses incurred in 2018, 2019, and 2020 can offset income taxed at the higher 35% tax rate in effect before 2018,” according to the report. “Taxing profits at one rate while allowing losses to produce savings at a higher rate is an invitation for companies to play games, moving profits and losses around from one year to another on paper to reduce their tax bills.”
The report suggests Congress could pass some form of “minimum tax” requiring profitable companies to pay at least some tax in any profitable year or reducing the tax breaks that allow companies to pay $0 in federal taxes.
“When President Trump signaled his intention to cut corporate taxes in 2017, he and Congress had an opportunity to pare back the many loopholes that have allowed companies to avoid tax on much of their income since the early 1980s,” the report states.
“But now, with three years of data published on the effective tax rates paid by publicly traded companies, it is clear that the (Tax Cuts and Jobs Act) has not meaningfully curtailed corporate tax avoidance and may even be encouraging it.”