Even with pretax profits, many big companies pay zero US tax
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 firms 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 group believes the tax system needs to raise more tax revenue.
The 55 companies named in the report issued Friday cross many industries, from agriculture to high tech, and they include such big names as 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 the 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 or making their home more energy efficient.
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.