New Delhi: Top large US companies, 55 of them, which paid $0 in corporate income tax in 202O, spent $450 million in lobbying for public policies as well on political contributions, says a report, The Price of Zero, by Public Citizen, a non-profit consumer advocacy organisation in the US, citing a study by ITEP, a Left-leaning think tank.
The break-up of the total amount includes $408 million in lobbying and $42 million in campaign contributions.
Among the top Fortune 500 spenders on political lobbying are FedEx, which spent $71 million, followed by Charter Communications ($64 million), American Electric Power ($42 million), Duke Energy ($37 million) and Textron ($22 million), the key findings of the study show.
According to The Price of Zero report, these companies had received $3.5 billion in tax rebates, “money they can turn around and spend to influence tax policy.”
According to a recent report in Fortune, citing the Left-leaning Institute on Taxation and Economic Policy (ITEP), 55 publicly traded large US corporations, such as FedEx, Nike, Salesforce etc, avoided paying deferral income taxes last year.
These companies “collectively enjoyed almost $40.5 billion in U.S. pretax income in 2020, according to their annual financial reports. The statutory federal tax rate for corporate profits is 21 per cent. The 55 corporations would have paid a collective total of $8.5 billion for the year had they paid that rate on their 2020 income. Instead, they received $3.5 billion in tax rebates,” says the ITEP report.
Of the 55 companies, 26 were identified by ITEP as having paid no federal income taxes for three consecutive years—despite having reported profits in each of those years, and a combined $77 billion in earnings over that three-year span, says the report.
The ITEP report said that these tax-avoiding large US corporations did so by making use of loopholes to shelter their profits from federal taxes for “decades”, adding that the former Donald trump administration’s Tax Cuts and Jobs Act 2017 “failed to address loopholes that enable tax dodging—and may have made [them] worse.”
As per the other key findings of the ITEP report, of the top 25 recipients of money from the corporations that paid zero in taxes in Congress, 20 are Republicans.
“Each of these recipients voted for the Tax Cuts and Jobs Act of 2017, which lowered the corporate tax rate,” says the report, adding that “these companies together have sent an average of 526 lobbyists to influence the federal government each year.”
Susan Harley, managing director of Public Citizen’s Congress Watch division, is quoted as saying in The Price of Zero report that: “...it’s critical that the public understand that while paying nothing to support the upkeep of our government, these companies have been spending huge amounts of money to try to keep the game rigged in their favor.”
The Fortune article points out that it is this Act through which corporate tax rates were slashed to 21% from 35%, and it included a provision allowing companies to immediately write off the cost of capital investments in equipment via “accelerated depreciation,” enabling many companies to reduce their tax liabilities.
“Last year’s $2.2 trillion CARES Act coronavirus relief bill also provided a new avenue for tax avoidance, according to ITEP, by including a provision allowing corporations to “carry back” losses to offset taxable profits in previous years. The think tank estimated that the 55 companies that avoided federal income taxes in 2020 “enjoyed at least $500 million of tax brakes last year from the CARES Act provision liberalizing loss carrybacks,” the article said.
According to ITEP estimates, had those 55 companies paid the statutory 21% corporate tax rate on their 2020 profits, their collective tax bill last year would have amounted to $8.5 billion. Instead, they received a combined $3.5 billion in tax rebates.
The ITEP said its report was based on its analysis of annual financial reports filed by US’s largest publicly traded corporations in their most recent fiscal year.
“All data presented here come directly from the income tax notes of these reports. Some companies with unusual fiscal years have not yet filed such reports. Some publicly traded corporations paid nothing on profits in their most recent fiscal year but are not included in this report because they are not part of the S&P 500 or Fortune 500,” it said.
The ITEP report comes amid the pandemic-induced economic crisis following which President Joe Biden recently announced a $2 trillion infrastructure proposal that includes plans to raise corporate tax rate to 28%.