At least 55 of America's largest companies avoided federal taxation last year through certain tax breaks, some of which were revived during the pandemic.
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Up to 55 in the US, according to the Institute for Tax and Economic Policy (ITEP), the largest companies have not paid federal taxes on their 2020 profits.
The companies, which include Con Edison, Dish Network, FedEx, HP, Nike and Salesforce, reportedly combined nearly $ 40.5 billion in US pre-tax revenue last year. Due to tax relief under the Tax Reduction and Employment Act 2017 (TCJA) and the CARES Act 2020, they have been able to avoid federal income tax for years, according to the ITEP report. If companies had paid the 21% tax rate on corporate profits, they would have spent $ 8.5 billion, he adds.
The news comes as millions of Americans struggle to make ends meet during the pandemic. According to data from the United States Labor Office for Statistics, around 10 million people remain unemployed even if the economy is trending upward.
Related: 75 Items That You May Be Deductible From Your Taxes
The ITEP study also found that federal tax avoidance remained "widespread" among businesses between 2008 and 2015 – long before the TCJA was passed. Last year, more than a dozen of them, including Nike and Salesforce, allegedly took advantage of executive stock option tax breaks to lower their income taxes. Nike, along with others like HP, also used the federal research and experimentation loans to lower their taxes.
In fact, a number of companies received a total of $ 3.5 billion in tax breaks instead of paying federal taxes. For example, instead of paying for its US pre-tax revenue of nearly $ 2.9 billion last year, Nike received a tax break of $ 109 million. FedEx also paid no tax on its $ 1.2 billion U.S. pre-tax revenue and received a $ 230 million discount.
As ITEP notes, the CARES Act has temporarily restored companies' ability to carry losses – including losses from five years ago – offsetting income that was taxed at the pre-2018 35% tax rate. The 55 companies surveyed by ITEP received more than $ 500 million in tax breaks from CARES temporary tax breaks and other benefits in the past year alone.