By: Eric Galatas, Public News Service
DENVER – In the first year of the Trump administration’s new tax law, 91 Fortune 500 companies didn’t pay a dime in federal income tax, according to a new study by the Institute on Taxation and Economic Policy.
Report co-author Matthew Gardner, senior fellow at the institute, said using legal loopholes, corporations avoided paying $74 billion into the nation’s coffers in 2018 alone.
“These companies aren’t simply following the law; in many cases, they wrote the law,” Gardner said. “These corporate tax cuts were enacted because of a very aggressive lobbying strategy by the business community.”
Gardner pointed out corporate tax cuts and loopholes have been enacted by Congresses and presidents of both major parties for the past two decades. Champions of the new tax code argued lowering corporate rates would lead to increased investments and higher wages, and would increase federal revenues by removing tax shelters.
Gardner said, outside of a few one-time bonuses, wages for most workers have not gone up, and most companies used the extra cash to buy back stocks, not open new factories. He said if the nation’s largest corporations continue to avoid paying their fair share, there could be across-the-board cuts in public investments.
“Making our highways passable, making our health-care system better, making our education system better. All of these things are things that we value” he said. “And they’re things that will be un-fundable if we continue to allow the corporate income tax to be drained.”
The new tax law lowered the corporate rate from 35% to 21%, but researchers found the average tax rate actually paid by companies was just 11%. Tax rates for 56 companies were between zero and 5% in 2018. Corporate tax revenues are near historic lows as a share of the nation’s GDP, at just 1%.