Corporate Tax Avoidance in the First Year of the Trump Tax Law

ITEP’s examination of Fortune 500 companies’ financial filings identifies 379 companies that were profitable in 2018 and that provided enough information to calculate effective federal income tax rates, which is the share of 2018 pretax profits they paid in federal income taxes in that year. For most of these companies, their effective federal income tax rate was much lower than the statutory corporate tax rate of 21 percent. This is by design.

When drafting the tax law, lawmakers could have eliminated special breaks and loopholes in the corporate tax to offset the cost of reducing the statutory rate. Instead, the new law introduced many new breaks and loopholes, though it eliminated some old ones. The unsurprising result: Profitable American corporations in 2018 collectively paid an average effective federal income tax rate of 11.3 percent on their 2018 income, barely more than half the 21 percent statutory tax rate.

Key Findings:

The 379 profitable corporations identified in this study paid an effective federal income tax rate of 11.3 percent on their 2018 income, slightly more than half the statutory 21 percent tax

91 corporations did not pay federal income taxes on their 2018 U.S. income. These corporations include Amazon, Chevron, Halliburton and IBM. An ITEP study released in April 2019 examined 2018 Fortune 500 filings released to date and found 60 companies paid zero in federal income taxes. Now, all companies have released their 2018 financial filings, and this report reflects that.

Another 56 companies paid effective tax rates between 0 percent and 5 percent on their 2018 income. Their average effective tax rate was 2.2 percent.

Corporate Tax Avoidance in the First Year of the Trump Tax Law
ITEP, December 16, 2019

Undoing the Damage caused by TCJA (Testimony)

This testimony from Center on Budget and Policy Priorities Chye-Ching Huang before the House Budget Committee highlights flaws in the so-called Tax Cuts and Jobs Act and offers recommendations to undo the damage the law inflicted upon low- and moderate-income people, while rewarding corporations and the wealthy.

Fundamentally Flawed 2017 Tax Law Largely Leaves Low- and Moderate-Income Americans Behind
Center on Budget and Policy Priorities, Feb. 27, 2019

Votes Are in: 2018 Tax Battle at the Polls

The 2017 tax law was so incredibly unpopular that its GOP backers in Congress eventually shied away from touting it during their 2018 election campaigns. In this piece, Americans for Tax Fairness looks at both state and national analysis of tax policy messaging and how voters responded.

Analysis of Tax Issues in the 2018 Federal Midterm Elections
Americans for Tax Fairness, Sept. 20, 2018

 

TCJA: The Evidence (or Lack Thereof) Is In

By now, it’s well known that the 2017 tax law did not deliver on its false promise to boost the middle class. This blog post by the Economic Policy Institute debunks some of the rosy rhetoric about the tax law’s so-called benefits for ordinary people.

Further evidence that the tax cuts have not led to widespread bonuses, wage or compensation growth
Economic Policy Institute, Sept. 18, 2018

Wealthy Benefit Most From Decades of Tax Cuts

All income groups received tax cuts, but Bush-era provisions ensured the well-off gained more than others. Some progressive tax changes under Obama reduced the share of tax cuts to the wealthiest, but they continued to benefit most.

Federal Tax Cuts in the Bush, Obama, and Trump Years
Institute on Taxation and Economic Policy, July 11, 2018