Despite raking in billions in earnings, Nike, FedEx, and two dozen different public firms have paid no federal company income tax in the US since 2018, according to a study by the Institute on Taxation and Economic Policy, a Washington-based analysis group.
The habits continues what ITEP describes as a decades-long development of firms discovering methods to keep away from taxes by means of authorized loopholes reminiscent of deductions and exemptions. The 2017 tax invoice enacted by former US president Donald Trump, which slashed the highest company tax charge from 35% to 21%, might have worsened the scenario, the group stated.
In 2020 alone, Nike recorded pre-tax income of $2.9 billion, but it paid no federal income tax, the evaluation discovered. Instead, it received a tax rebate of $109 million. FedEx acquired a rebate of $230 million on pretax income of $1.2 billion final 12 months.
Both have been amongst people who have paid no federal income taxes in the years since Trump’s tax act, which a FedEx govt known as a “mighty fine Christmas gift” on a Dec. 2016 earnings name, a 12 months earlier than the proposed invoice grew to become regulation. An investigation performed later by the New York Times discovered FedEx, which lobbied for the invoice, benefitted greatly from it. In its 2017 fiscal 12 months, it owed greater than $1.5 billion in taxes. The subsequent 12 months it owed nothing.
Public firms don’t share their tax filings, however they’re required to file annual monetary experiences, that are publicly out there. ITEP used the notes on income tax in these experiences to reach at its figures.
Companies drew on quite a lot of completely different tax breaks to scale back their payments. Various these in ITEP’s evaluation, together with Nike, leveraged a break permitting them to put in writing off bills associated to govt inventory choices. Nike was additionally amongst people who claimed a federal credit score for investments in analysis.
The 2020 CARES Act, meant to assist firms keep afloat by means of the pandemic, additionally helped firms final 12 months. In an announcement, FedEx stated the laws helped it navigate the pandemic whereas persevering with to rent new staff, make capital investments, and fund worker pension plans. The firm declined to touch upon its tax funds previous to 2020. Nike didn’t reply to a request for remark.