NC Budget and Tax Center

Trump tax policy helped many of the biggest corporations completely avoid taxes in 2018

With last years’ tax returns now in, it is all the more evident how massive a gift the Trump Administration and Republicans in Congress gave corporate America in their 2017 package of tax cuts. Many of America’s wealthiest corporations received a huge windfall in 2018, even as most Americans face the prospect of declining public services and deepening public debt.

A recent report shows that 60 of the largest corporations managed to pay no corporate income taxes in 2018, and many of these companies actually received substantial tax rebates. A few notable examples of corporations who made off particularly well under the Trump tax cuts include:

  • Amazon: Had $11 billion in revenues from business in the United States and received $129 million in tax rebates.
  • Netflix: Paid no corporate taxes on over $850 million in U.S. income.
  • Chevron: Revenues from U.S. operations of approximately $4.5 billion and received $181 million in federal tax rebates.
  • Halliburton: Took in over $1 billion in U.S. revenues, and received a $19 million tax rebate

These companies managed to avoid taxation by exploiting a range of loopholes in the federal tax code that were either left untouched or actually expanded by the 2017 tax bill.

Capital-intensive companies like Chevron and Delta Airlines were able to slash their taxes using Accelerated Depreciation, a provision well known in corporate accounting circles but not widely understood beyond those circles, that allows companies to claim larger tax write-offs for the decreasing value of expensive equipment.

Amazon and Netflix were leaders in using stock option payments to their corporate executives to avoid millions in corporate taxes. Even though granting stock options does not directly hit companies’ revenues like salaries would, corporations can still claim the value of the options as an expense and thereby reduce their tax bill. Moreover, these options also allow wealthy executives to avoid paying the personal income tax rate on that income, instead paying the lower rate applied to capital gains.

A range of other companies were able to zero out their taxes in 2018 using tax credits for energy production, research and development, and other special treatment still littered throughout the federal tax code.

Instead of draining the swamp, the 2017 tax cuts only gave smart corporate attorneys more bog to explore. The result was predictable: Most working families and small businesses got peanuts (or saw their taxes go up) while many of the biggest corporations in the country avoided paying taxes altogether. Sooner or later we have get serious about getting large and profitable companies to pay their share, or we will all end up paying the bill for tax breaks that mostly benefit the most fortunate.

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