As someone who just came face-to-face with his 2018 tax bill this very morning, and whose hands have stopped shaking just enough to accurately pound the keys on this keyboard, the information I’m about to convey is somewhere between “vexing” and “wildly infuriating,” and is only somewhat mitigated by the fact that the injustice is so very, very expected. So brace yourselves, I guess: The Institute on Taxation and Economic Policy has found that 60 corporations, all of them Fortune 500 giants, paid absolutely no federal income taxes in 2018.
Now, let’s put this in context: these 60 companies earned roughly $79 billion in pre-tax income, which means that at the 21 percent rate of corporate taxation, that should account for $16.4 billion in tax revenue. There are lot of things the federal government could do with $16.4 billion—it would cover about 40 percent of the cost of making public colleges and universities tuition free under Bernie Sanders’ plan, for instance. And that’s just a handful of companies! On a smaller scale, the ongoing Flint water crisis could have been fixed years ago with $55 million—that’s million. I could go on, but you get the point—there’s a lot of good this money could do in the right federal hands, but instead, it’s staying with the profit-hungry corporations.
The 60 companies (up from about 30 in the years 2008 through 2015) include a lot of the usual suspects: Amazon, General Motors, IBM, Delta, Halliburton, Netflix, Goodyear, U.S. Steel, Xcel Energy, Duke Energy, and more. ITEP goes into detail on exactly which loopholes and breaks account for the zeroed balance of each company. Here are some details on Amazon and Netflix:
Amazon reduced its income taxes by more than $1 billion in 2018 using a tax break for stock options. A June 2016 Citizens for Tax Justice report found that 315 companies in the Fortune 500 disclosed receiving benefits from this tax break, which allows companies to write off stock-option related expenses in excess of the cost they reported to shareholders and the public. Netflix reduced its income taxes by $191 million using this tax break.
That’s just the tip of the iceberg—between fossil fuel and alternative energy tax subsidies, along with various other vague means of legal tax avoidance (Chevron claims an income tax reduction of $163 million because of unspecified “tax credits,” and Amazon tops them with $419 million), these 60 companies reduced their bill to a flat zero. Some went further and actually got rebates, including Amazon ($129 million), IBM ($342 million), and Molson Coors ($22.9 million), to name just a few.
Again, that’s a rebate. On billions of dollars of profit!
To say we need corporate tax reform, at this point, is like saying we need to put out a forest fire raging toward our homes. The system is profoundly unfair, and it’s not just about these mega-companies keeping all their profits while the rest of us have to abide by the rules—it’s about the money that’s not going where it belongs in the richest nation on earth: to the people that need it the most.