These 19 Fortune 100 companies paid next to nothing — or nothing — in taxes in 2021

Corporate profits are at record highs, but many of the nation’s biggest companies barely pay taxes. Indeed, a new CAP analysis of recent filings from Fortune 100 investors reveals that 19 of America’s largest profitable corporations pay single-digit effective tax rates or nothing at all.

Figure 1

The figure above highlights the incredibly low rates these 19 companies pay. However, this problem extends beyond the Fortune 100: other notable large companies are paying similarly low rates. The failure of massive, highly profitable corporations to pay their fair share is another illustration of the urgency of President Joe Biden’s proposed corporate tax reforms.

Fortune 100 companies benefiting from the current tax system

Companies such as AT&T, Charter Communications, American International Group (AIG) and Dow have indicated they will pay negative effective federal tax rates on their US profits for 2021, in effect receiving tax refunds instead. (see Methodology for more details on these tax rate calculations)

  • AT&T said it will pay no federal income tax in 2021, despite $29.6 billion in revenue. The company reported a tax refund (or tax benefit) of $1.2 billion.*
  • Charter Communications, along with brands like Spectrum, said it will pay no federal income tax in 2021, despite $6 billion in revenue. The company reported a tax refund of $12 million.
  • AIG said it will pay no federal income tax for 2021, despite earning $9.8 billion. The company reported a tax refund of $216 million.
  • Dow Inc. said it would pay no federal income tax in 2021, despite making $1.5 billion in profit. The company reported a tax refund of $46 million.

They are some of the largest companies in the world, generating billions in profits; yet none will owe a cent in federal income tax. The large corporation tax rate is nominally 21%, up from 35% due to the Tax Cuts and Jobs Act (TCJA) of 2017. But as their investor statements show, many companies pay a much lower real or “effective” rate. on their profits because of the many ways they can reduce their taxable income under the current tax system. The low tax rates on these companies are compounding an already unfair rise in inequality.

Fortune 100 companies with effective tax rates below 10%

Meanwhile, huge, highly profitable corporations such as Amazon, ExxonMobil, Microsoft, JPMorgan Chase, Verizon, FedEx, Ford, General Motors (GM), Bank of America, Chevron, UPS, MetLife, Merck, Nike, and Coca- Cola have all enjoyed effective tax rates below 10%, less than half the federal statutory rate.

  • Amazon’s effective federal tax rate was 6.1% in 2021, with $35.1 billion in U.S. income and $2.1 billion in federal income taxes.
  • ExxonMobil’s effective federal tax rate was 2.8 percent in 2021, with $9.3 billion in U.S. profits and $236 million in federal income taxes.
  • Microsoft’s effective federal tax rate was 9.7% in 2021, with $33.7 billion in U.S. income and $3.3 billion in federal income taxes.
  • JP Morgan Chase’s effective federal tax rate was 5.9% in 2021, with $48.2 billion in U.S. income and $2.9 billion in federal income taxes.
  • Verizon’s effective federal tax rate was 6.9% in 2021, with $27.2 billion in US income and $1.9 billion in federal income taxes.
  • Ford’s effective federal tax rate was 1 percent in 2021, with $10 billion in U.S. income and only $100 million in federal income taxes.
  • GM’s effective federal tax rate was 0.2% in 2021, with $9.4 billion in U.S. income and just $20 million in federal income taxes.
  • Chevron paid just $174 million in federal income tax, earning $9.5 billion last year. This is an effective federal tax rate of only 1.8 percent.
  • Bank of America’s effective federal income tax rate was 3.5% in 2021, with $31 billion in U.S. income and just $1.1 billion in federal income taxes.
  • UPS’s effective federal tax rate was 9.9% in 2021, with $14 billion in U.S. income and $1.4 billion in federal income taxes.
  • FedEx’s effective federal tax rate was 4.2% in 2021, with $4.7 billion in U.S. income and just $199 million in federal income taxes.
  • MetLife’s effective federal tax rate was 1.3% in 2021, with $4.8 billion in U.S. income and only $62 billion in federal income taxes.
  • Merck’s effective federal tax rate was 4 percent in 2021, with $1.9 billion in U.S. income and just $74 million in federal income taxes.
  • Nike’s effective federal tax rate was 5.9% in 2021, with $5.6 billion in US income and only $328 million in federal income taxes.
  • Coca-Cola’s effective federal income tax was 7.1 percent in 2021, with $3.4 billion in U.S. income and just $243 million in federal income taxes.

While this analysis was limited to companies on the Fortune 100 list, there are many other notable large companies that paid no federal income taxes in 2021, underscoring that the problem extends far beyond- beyond the Fortune 100. For example, Salesforce paid no federal income tax. in 2021, despite $2.7 billion in U.S. revenue; Duke Energy paid no federal income tax in 2021, despite $3.7 billion in U.S. revenue; and Kinder Morgan paid no federal income tax in 2021, despite earning $2.2 billion in U.S. income. Netflix, just outside the Fortune 100, paid a measly 1.1% on $5.3 billion in US revenue.

In the same year these companies managed to avoid paying their fair share of taxes, the corporations as a whole achieved their best profits in years. According to data from financial data firm FactSet, the four most profitable quarters — since FactSet began collecting data in 2008 — for S&P 500 companies occurred in 2021. And the average net profit margin for S&P 500 companies on average over these quarters is 12.79. percent, according to a Yahoo News analysis of FactSet data.

Additionally, the Institute for Taxation and Economic Policy (ITEP) conducted a comprehensive analysis of federal taxes and business profits for a larger number of businesses last year, concluding that former President Donald Trump allowed many businesses to pay $0 in taxes. The analysis revealed that:

[W]ith three years of published data on the effective tax rates paid by publicly traded companies, it is clear that the TCJA has not significantly reduced corporate tax avoidance and may even encourage it.

ITEP found that for 2020, 55 profitable Fortune 500 or S&P 500 companies paid no federal taxes; and 26 paid nothing over the three-year period from 2018 to 2020, showing that this was not just a one-year aberration.

Conclusion

This status quo can be changed. Polls show that raising corporate taxes is one of the most popular elements of President Biden’s economic agenda. Policymakers must act now to ensure that big, profitable companies pay their fair share. President Biden has proposed — and the U.S. House of Representatives has already passed — a 15% minimum corporate tax, which is included in the fiscal year 2022 budget reconciliation bill passed by the House, as well as as other measures to put an end to corporate tax avoidance. More importantly, the bill closes offshore loopholes to prevent companies from shifting profits to tax haven countries to avoid US tax.

Ending corporate giveaways in the tax code and closing the loopholes would ensure big business starts paying their fair share, allowing the country to generate the revenue needed to invest in American families and build a healthy economy that works for everyone. .

Methodology

The US income tax expense and pretax profit data presented in this column is taken directly from the annual 10-K reports that companies have filed with the US Securities and Exchange Commission (SEC). United for the years ending 2021. Effective tax rates were calculated by dividing the companies’ current U.S. federal income tax expense reported to the SEC by their U.S. profit before federal income tax, that is, US pre-tax profit less current state and local income tax expense.

As ITEP explained, the current US federal income tax burden is businesses’ best estimate of the income taxes they will pay to the federal government for the year. Their actual tax returns are not made public.

The U.S. effective tax rates reported here differ from the “effective tax rate” measure that corporations themselves report for two basic reasons: their effective tax rate measure includes foreign taxes and deferred taxes, that is to say the taxes they will not pay this year.

This analysis generally follows the methodology used by ITEP, except that ITEP generally makes certain additional adjustments and refinements, including deducting “excess benefit” of stock options from income tax expense. income due. This analysis made no such adjustments.

Some companies that appeared to pay very low effective rates are not included in this list for data reasons, for example, if their financial statements did not isolate their U.S. earnings or if they had large “non-beneficial holdings”. control” in other companies. Some companies on this list have non-controlling interests that are essentially insignificant to their effective tax rate. Verizon said noncontrolling interests reduced its self-reported effective tax rate by 0.4 percentage points.

ExxonMobil’s 10-K did not distinguish between current and deferred portions of its state and local tax charges or the small amount of US tax it reported on non-US operations; the calculation above treats both as current income tax expense, but neither has a material impact on the company’s US federal income tax expense.

*Authors’ note: Companies are listed in order of size, according to the Fortune 100 list.

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