Just days after millions of Americans rushed to file their taxes, a new report has revealed just how adept many of the country’s biggest companies remain at avoiding taxes.
Nineteen companies among the Fortune 100 paid a rate of less than 10% on their profits when it came to their 2021 federal income taxes. And four of those companies even managed a negative rate — meaning they will effectively enjoy a refund from the federal government, according to a new analysis from the left-leaning Center for American Progress.
The four companies that say they’re getting money back from the government are AT&T (T), Charter Communications (CHTR), American International Group (AIG) and Dow Inc. (DOW). The 15 others paid taxes at a tax rate below 10%, well below the nominal rate of 21%.
The news comes as corporate America’s profits soared higher than ever in 2021. Democrats including the president have called for a higher corporate tax rate and a corporate minimum tax in the U.S., but both efforts have stalled on Capitol Hill.
“The fact that massive and highly profitable corporations are not paying their fair share is a further illustration of how the corporate tax reforms proposed by President Joe Biden are urgently needed,” the report’s authors wrote.
‘Taxes being deferred for future payment’
The data is based on an analysis of each company’s public 10-K filings, which include an estimate of their federal income taxes.
Yahoo Finance reached out to all four companies that got tax refunds. Dow responded by underlining that it complies with current tax laws and has paid more than $700 million in income taxes globally in 2021. A company spokesperson said the low 2021 bill in the U.S. was “driven by, among other factors, the approximately $1 billion elective pension contribution Dow made in 2021 and overpayments of tax related to prior years.” Furthermore, the spokesperson said the report “mischaracterizes Dow’s tax reporting” when it comes to deferred taxes and tax adjustments from prior years.
Charter Communications added that its “investments in technology and infrastructure — which totaled more than $40 billion from 2017 to 2021 alone — have resulted in a decreased tax burden, as well as taxes being deferred for future payment.” The company said it paid “significant” local taxes in 2021.
Of course, companies pay more taxes than just those at the federal level. Companies also pay state and local taxes and send money to Washington via payroll taxes on their employees.
The 2017 Tax Cuts and Jobs Act, signed into law by then-President Donald Trump, cut the corporate tax rate from 35% to its current 21%. Many corporations pay a rate well below that by writing off expenses like capital investments or research and development.
This week’s findings evoke headlines in recent years that caused a public outcry when it was revealed that Amazon (AMZN) paid $0 in taxes while making billions in profits. Last year, Amazon paid a tax rate of 6.1%, sending the federal government $2.1 billion on over $35 billion in pre-tax U.S. earnings. Overseas, Amazon reportedly managed to completely avoid income tax on $55 billion in European sales in 2021.
In the U.S., a host of well-known names paid an effective tax rate of less than 10% last year in addition to Amazon: ExxonMobil (XOM), Microsoft (MSFT), JPMorgan Chase (JPM), Verizon (VZ), FedEx (FDX), Ford (F), General Motors (GM), Bank of America (BAC), Chevron (CVX), UPS (UPS), MetLife (MET), Merck (MRK), Nike (NKE), and Coca-Cola (KO).
Tuesday’s report added that companies outside of the Fortune 100 — including Salesforce (CRM) and Duke Energy (DUK) — also managed to have an effective tax rate of 0% or below last year.
The Institute for Taxation and Economic Policy (ITEP) has tracked this data for years and released a comprehensive analysis of 2020 tax returns last year, finding that 55 corporations paid $0 in federal taxes on their 2020 profits.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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