Trump era tax cuts for the rich pile on
By Jake Johnson
Jan 14, 2023
A study released Friday by the Government Accountability Office found that more than a third of large, profitable corporations in the United States paid nothing in federal income taxes in 2018, the year the regressive Trump-GOP tax cuts took effect.
The GAO analysis, commissioned by Sen. Bernie Sanders (I-Vt.), showed that “average effective tax rates—the percentage of income paid after tax breaks—among profitable large corporations fell from 16% in 2014 to 9% in 2018.”
According to the GAO, the share of profitable large corporations that owed $0 in federal income taxes after credits rose from around 22% in 2014 to 34% in 2018.
“Each year from 2014-2018, about half of large corporations and a quarter of profitable ones didn’t owe federal taxes,” the GAO noted. “For example, profitable corporations may not owe taxes due to prior years’ losses.”
The Tax Cuts and Jobs Act, which former President Donald Trump signed into law in December 2017, slashed the corporate tax rate from 35% to 21% and authorized a slew of other giveaways that made it easier for large businesses and wealthy individuals to lower their tax bills.
“While House Republicans want to make huge cuts to Social Security, Medicare, and Medicaid because of their ‘serious concern’ about the deficit, they voted to provide over a trillion dollars in tax breaks to large corporations and the top one percent,” Sanders said in a statement Friday. “The situation has become so absurd that over a third of the largest and most profitable corporations in our country pay nothing in federal income taxes.”
“Instead of cutting vital and popular programs like Social Security and Medicare,” the senator added, “we need to repeal the Trump tax breaks for the rich and demand that the largest corporations in America finally start paying their fair share of taxes.”
“The situation has become so absurd that over a third of the largest and most profitable corporations in our country pay nothing in federal income taxes.”
The GAO report doesn’t name the specific companies that paid nothing in federal income taxes over the period the federal agency examined.
But separate analyses from outside organizations such as the Institute on Taxation and Economic Policy (ITEP) have identified such corporations. In 2021, ITEP found that at least 55 large U.S. corporations including Nike, FedEx, HP, and Kinder Morgan paid $0 in federal taxes on 2020 profits.
Steve Wamhoff, ITEP’s federal policy director, wrote in a blog post on Friday that the GAO’s new study confirms that “the Tax Cuts and Jobs Act was an unprecedented gift to corporations.”‘
“What the GAO report really demonstrates is that no matter how you measure the federal corporate income tax, not much of it has been paid in recent years, and the 2017 tax law has brought it to a new low,” Wamhoff added. “The corporate minimum tax enacted as part of the Inflation Reduction Act will help address this problem. But as ITEP has explained, another key step for Congress is to implement the international corporate minimum tax that the Biden administration negotiated with other governments, and which is designed to address the offshore tax dodging that will otherwise be very difficult to resolve.”
Sanders, for his part, pointed to 2021 legislation he introduced alongside Rep. Jan Schakowsky (D-Ill.) that “would have restored the pre-Trump corporate tax rate of 35% and comprehensively shut down offshore corporate tax avoidance.”
“The provisions in this bill to close offshore loopholes alone could raise over $1 trillion in revenue from multinational companies over the next decade,” Sanders’ office noted in a press release Friday.
The legislation, formally titled the Corporate Tax Dodging Prevention Act, never received a vote in the Senate or the House.
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Jake Johnson is a staff writer for Common Dreams.
Headline and Photo by These Green Times