President Donald Trump may be that his deficit-expanding tax cuts are necessary to help grow the economy, but a recent study indicates that many of America's largest corporations already pay barely any taxes at all.
According to a study by the liberal Institute of Taxation and Economic Policy, "profitable Fortune 500 firms collectively pay far less than the statutory 35 percent federal corporate tax rate. More than 250 profitable Fortune 500 corporations paid an average effective tax rate of 21.2 percent on their U.S. profits over the eight years between 2008 and 2015."
The report described how "18 paid ZERO in taxes over the full eight-year period, 100 paid zero — or less — in at least one profitable year during the eight-year period, 58 of those companies had multiple zero-tax years, 24 companies zeroed out their taxes in at least four of the eight years, 48 companies paid a rate between 0 and 10 percent over eight years."
There are a number of tactics used by large corporations to avoid their ostensible tax responsibilities. Those include sending their profits offshore, writing off equipment and machinery before they wear out in a practice known as accelerated depreciation, allowing executives to buy future stock at a discount and then deduct their payouts as losses, and lobbying for industry-specific tax breaks.
On Thursday, Sens. Bernie Sanders of Vermont and Brian Schatz of Hawaii introduced a bill that would remove the tax incentives that companies receive by sending their profits offshore.
"The truth is that we have a rigged tax code that has essentially legalized tax dodging for large corporations. Offshore tax haven abuse has become so absurd that one five-story office building in the Cayman Islands is now the ‘home’ to more than 18,000 corporations," Sanders said.