April 17, 2021

Big Companies Like FedEx and Nike Paid No Federal Taxes

Backers of more aggressive policies on corporate taxes pointed to the study’s findings. “This isn’t rocket science: giant corporations that report billions in profit shouldn’t be able to pay $0 in federal taxes,” Senator Elizabeth Warren, Democrat of Massachusetts, said on Twitter.

The Institute on Taxation and Economic Policy has been issuing a form of its report on corporate taxes for decades. During the 2020 presidential campaign, its findings grabbed center stage, with Democratic candidates citing it to argue the tax code was deeply flawed.

Tax avoidance strategies include a mix of old standards and new innovations. Companies, for example, saved billions by allowing top executives to buy discounted stock options in the future and then deducting their value as a loss.

The Biden administration announced this week that it planned to increase the corporate tax rate to 28 percent, and establish a kind of minimum tax that would limit the number of zero-payers. The White House estimated that the revisions would raise $2 trillion over 15 years, which will be used to fund the president’s ambitious infrastructure plan.

Supporters say that in addition to yielding revenue, the rewrite would help make the tax code more equitable, requiring individuals and companies at the top of the income ladder to pay more. But Republicans have signaled that the tax increases in the Biden proposal — which Senator Mitch McConnell of Kentucky, the minority leader, called “massive” — will preclude bipartisan support.

Referring to the proposed revisions, Matt Gardner, a senior fellow at the taxation institute, said, “If I were going to make a list of the things I would want the corporate tax reform to do, this outline tackles all these issues.”

Deductions and exemptions wouldn’t disappear, but other changes like the minimum tax would reduce their value, he said.

Article source: https://www.nytimes.com/2021/04/02/business/economy/zero-corporate-tax.html

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