Tax Day has come and gone, and Americans are still trying to make heads or tails of their taxes this year. But for many large corporations, the picture is much clearer: 60 Fortune 500 companies paid absolutely nothing in federal taxes this year. That’s twice as many as last year, and the GOP’s tax law is to blame.
Huge corporations have moaned about the old 35% corporate tax rate for years, while conveniently leaving out how little, if anything, they’ve actually been paying. The largest and most profitable corporations can afford armies of lawyers to find every applicable break, loophole, deduction, and credit in the tax code, and it’s been working beautifully for them. In 2016, 27 S&P 500 companies paid no federal taxes, with 18 companies paying nothing for the entire eight-year period from 2008 to 2015. Then, Republican’s 2017 Tax Cuts and Jobs Act (TCJA) slashed the corporate tax rate to 21%, making it even easier for corporations to bring their taxes down to (and below) zero.
For 2018, Amazon paid nothing on $11 billion in income. Chevron and General Motors paid nothing on over $4 billion each. In fact, each of these three got over $100 million back from the federal government. The 60 as a group received a combined $4.3 billion in refunds. Thanks to the GOP tax bill, the American people are effectively subsidizing the largest corporations for raking in massive profits.
It might sound like they’re getting away with something illegal, but these companies didn’t have to break the law to achieve these results. In fact, it’s their eagle-eyed attention to the letter of the tax code that got them out of paying. The real cause of the problem is a swiss cheese corporate tax code full of carve-outs, loopholes, and custom-made exemptions, and a Congress too hooked on corporate cash to fix it.
Corporations have coasted on the “job creator” myth for decades — the idea that the government should bend over backwards to keep corporations and the wealthy happy because they employ people, and favorable treatment leads to more jobs. This lie has led to Republicans rewarding corporations for existing, cutting their taxes time and time again, while the fabled benefits for working families have failed to materialize. Of course, this trickle-down myth has always been a public pretext for lining the wealthy’s pockets in the first place.
This isn’t just about corporate taxes compared to the income taxes working folks pay on their paychecks. Even among businesses, the tax code’s complexity favors the gigantic corporations with the resources to pay for tax lawyers. While a small group has avoided taxes entirely, Fortune 500 companies as a whole paid an average 19% effective tax rate from 2008-2012. All businesses (including small businesses) paid an average rate of about 29% before TCJA. These loopholes don’t just let big corporations off the hook, they put small businesses who can’t afford armies of lawyers and accountants at a competitive disadvantage. If anyone should be complaining about the corporate tax rate, it’s not the huge corporations that aren’t paying it anyway.
If the goal of the Trump tax bill had really been to help all businesses, Republicans would have simplified corporate taxes by closing loopholes as well. But by slashing the base rate while leaving the dense maze of credits, subsidies, and deductions largely intact, they made sure only the largest corporations could make the most of the change.
The Republican tax bill is the latest step in a long journey down the wrong road. Corporate taxes make up just a third of the share of total tax revenue they did in 1952, draining funding from important government services. Instead of restoring fair levels of corporate taxation, Republicans slashed the rate even further, putting critical programs like Social Security and Medicare on the chopping block to balance the books. Corporate tax cuts haven’t helped the American people, and it’s time to reverse course.