Group: 55 major firms did not pay any federal taxes last year
NEW YORK — Just as President Joe Biden is pushing to raise taxes on companies to help pay for his infrastructure plan, a report from a Washington policy group is highlighting how many of them pay zero despite making big pretax profits.
More than 50 of the largest U.S. companies paid nothing in federal income taxes last year, with many getting rebates, even though they reported almost $40.5 billion in pretax profits as a group, according to the Institute on Taxation and Economic Policy.
The 55 companies named in the report include Nike and Duke Energy. The report says the companies took advantage of breaks that were preserved or expanded under President Donald Trump’s 2017 overhaul of the tax code, as well as the economic rescue package that Washington passed last spring.
Under the 2017 tax cut, the rate on corporate profits is 21%.
But companies can use many tools to avoid taxes, such as writing off expenses related to stock options they give their CEOs and other executives.
Companies can also use a suite of available tax credits by making investments that the U.S. government is trying to encourage, similar to how individuals can get tax breaks for saving in a retirement fund.
At Duke Energy, one of the nation’s largest utility owners, the company recorded $110 million in tax credits last year for producing renewable energy through wind facilities, for example. That and other credits helped the Charlotte, North Carolina-based company net a $281 million rebate for federal income taxes last year, after reporting $826 million in pretax U.S. income from continuing operations.
“Lawmakers developed these tax policies to encourage corporate taxpayers to make investments in economic growth, infrastructure and renewables,” Duke spokesperson Catherine Butler said.
Nike, meanwhile, used a federal tax credit meant to encourage corporate research and development. The athletic apparel giant also took tax benefits related to share-based compensation for its fiscal year that ended May 31. Altogether, it received $109 million in federal tax rebates after reporting total pretax income of $2.9 billion for the year.
Officials at Nike, which is based in Beaverton, Oregon, could not be immediately reached for comment.
“Most CEOs of large, publicly trade corporations are not going to risk prison to get out of paying taxes when Congress provides them with so many legal ways to do so,” said Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy.
The $2.2 trillion rescue package approved last spring opened more avenues for companies to limit their federal tax bills. The law allowed corporations to takes losses reported in 2018 through 2020 and use them to reduce tax liabilities from earlier years.