Their Tax Rate Is 0%
You should be jealous of Amazon, G.M. and Coors.
The Amazon fulfillment center in Staten Island. According to a new report, Amazon was one of about 60 big companies that paid no federal corporate taxes last year.CreditJohannes Eisele/Agence France-Presse — Getty Images
By David Leonhardt
Amazon. Delta Air Lines. Chevron. IBM. General Motors. Molson Coors. Eli Lilly.
What do these companies have in common? They paid no federal taxes last year.
Thanks to President Trump’s 2017 tax law, the number of Fortune 500 companies that pay no federal taxes roughly doubled last year, to 60, according to an analysis by the Institute on Taxation and Economic Policy, a research group. Some of them effectively paid negative taxes, because they received a refund.
The number of companies paying no taxes has risen for two main reasons. First, the Trump tax law expanded some corporate tax breaks, such as the one for the purchase of machinery and vehicles. Second, the law reduced the top-line corporate tax rate, which means that some companies now have a low enough tax bill that they can wipe it out entirely with tax breaks.
Altogether, the law led to a 31 percent decline in corporate-tax revenue last year. That decline has helped cause an increase in the deficit. As the law professors Rebecca Kysar and Linda Sugin have written, the Trump tax cut is financed “on the backs of future generations.”
I think some decline in the top-line corporate-tax rate — which was higher than in most other countries — was justified. But the Trump tax cut didn’t go about it in the right way. It cut the rate too steeply and kept, or expanded, too many tax breaks. A better bill would have paired a more gentle decline in the rate with a tougher approach to tax breaks, essentially trying to level the playing field among companies. Even before the law change, American companies weren’t actually paying very much in taxes.
“At a time when the public’s confidence in our elected officials and our institutions is especially low, the specter of big corporations avoiding all income taxes on billions in profits sends a strong and corrosive signal to Americans: that the tax system is stacked against them, in favor of corporations and the wealthiest Americans,” writes Matthew Gardner, the lead author of the Institute on Taxation report.
Ben Smith, the editor of BuzzFeed News, emailed me Friday, taking objection to that day’s newsletter, in which I described one of BuzzFeed’s Trump-Russia stories as dubious. I was referring to BuzzFeed’s January story that claimed Trump “directed” and “personally instructed” Michael Cohen, his former personal lawyer, to lie about talks about a Trump Tower in Moscow.
Smith wrote to me that “the underlying claim — that Trump told Cohen to lie to Congress — has been backed up in Cohen’s own testimony, revelations about the edits Trump and his lawyers made, a congratulatory phone call he received after giving his false testimony, and more.” He added: “We have unearthed more facts than any other news outlet about the details of the Trump Tower Moscow deal — feel free to dig in here — and continue to stand by the Cohen story, with good reason.”
I still disagree. Since BuzzFeed’s story (which Robert Mueller’s office disputed), Cohen has said that Trump used code words and implication to get him to lie. If BuzzFeed or another media organization were doing the same story today, I think the language would be different in important ways. But I’m always happy to highlight substantive disagreement with my arguments, and I appreciate that Smith took the time to write.
I’d also note that BuzzFeed News has been doing excellent journalism, both on Russia and other subjects.