Type to search

NATIONAL TRENDING

How 60 Profitable Fortune 500 Companies Evaded All Federal Income Taxes in 2018

John Deere logo, Amazon logo, Halliburton logo, GM logo, Chevron logo
(Photo: Wikimedia and Pixabay)

A report by the Institute on Taxation and Economic Policy (ITEP) shows how 60 Fortune 500 companies avoided paying federal corporate income taxes in 2018.

Out of the Fortune 500 companies that have reportedly already filed their taxes for 2018, 60 of those companies managed to evade income taxes, despite being profitable, according to an ITEP report released last Thursday. The companies – including Amazon, Delta and IBM – had a total U.S. income of at least $79 billion, with an effective tax rate of -5%. Many of these companies received tax refunds.

 Companies Who Did Not Pay Taxes in 2018

Below is a comprehensive chart from ITEP showing the 60 companies that avoided paying federal income taxes in 2018. Figures are in millions of dollars.

Company U.S. Income Federal Tax Effective Tax Rate Industry
Activision Blizzard $447 $-228 -51% Computers, office equip, software, data
AECOM Technology $238 $-122 -51% Engineering & construction
Alaska Air Group $576 $-5 -1% Transportation
Amazon.com $10,835 $-129 -1% Retail & wholesale trade
Ameren $1,035 $-10 -1% Utilities, gas and electric
American Electric Power $1,943 $-32 -2% Utilities, gas and electric
Aramark $315 $-48 -15% Miscellaneous services
Arrow Electronics $167 $-12 -7% Retail & wholesale trade
Arthur Gallagher $322 Financial
Atmos Energy $600 $-10 -2% Utilities, gas and electric
Avis Budget Group $78 $-7 -9% Motor vehicles and parts
Celanese $480 $-142 -30% Chemicals
Chevron $4,547 $-181 -4% Oil, gas & pipelines
Cliffs Natural Resources $565 $-1 0% Oil, gas & pipelines
CMS Energy $774 $-67 -9% Utilities, gas and electric
Deere $2,152 $-268 -12% Industrial machinery
Delta Air Lines $5,073 $-187 -4% Transportation
Devon Energy $1,297 $-14 -1% Oil, gas & pipelines
Dominion Resources $3,021 $-45 -1% Utilities, gas and electric
DTE Energy $1,215 $-17 -1% Utilities, gas and electric
Duke Energy $3,029 $-647 -21% Utilities, gas and electric
Eli Lilly $598 $-54 -9% Pharmaceuticals & medical products
EOG Resources $4,067 $-304 -7% Oil, gas & pipelines
FirstEnergy $1,495 $-16 -1% Utilities, gas and electric
Gannett $7 $-11 -164% Publishing, printing
General Motors $4,320 $-104 -2% Motor vehicles and parts
Goodyear Tire & Rubber $440 $-15 -3% Motor vehicles and parts
Halliburton $1,082 $-19 -2% Oil, gas & pipelines
Honeywell International $2,830 $-21 -1% Industrial machinery
International Business Machines $500 $-342 -68% Computers, office equip, software, data
JetBlue Airways $219 $-60 -27% Transportation
Kinder Morgan $1,784 $-22 -1% Oil, gas & pipelines
MDU Resources $314 $-16 -5% Oil, gas & pipelines
MGM Resorts International $648 $-12 -2% Miscellaneous services
Molson Coors $1,325 $-23 -2% Food & beverages & tobacco
Netflix $856 $-22 -3% Retail & wholesale trade
Occidental Petroleum $3,379 $-23 -1% Oil, gas & pipelines
Owens Corning $405 $-10 -2% Miscellaneous manufacturing
Penske Automotive Group $393 $-16 -4% Motor vehicles and parts
Performance Food Group $192 $-9 -4% Retail & wholesale trade
Pioneer Natural Resources $1,249 Oil, gas & pipelines
Pitney Bowes $125 $-50 -40% Computers, office equip, software, data
PPL $1,110 $-19 -2% Utilities, gas and electric
Principal Financial $1,641 $-49 -3% Financial
Prudential Financial $1,440 $-346 -24% Financial
Public Service Enterprise Group $1,772 $-97 -5% Utilities, gas and electric
PulteGroup $1,340 $-44 -3% Miscellaneous manufacturing
Realogy $199 $-13 -7% Miscellaneous services
Rockwell Collins $719 $-16 -2% Aerospace & defense
Ryder System $350 $-23 -7% Transportation
Salesforce.com $800 Computers, office equip, software, data
SpartanNash $40 $-2 -4% Retail & wholesale trade
SPX $66 $-5 -8% Industrial machinery
Tech Data $203 $-10 -5% Retail & wholesale trade
TOTAL, THESE COMPANIES $79,025 $-4 -5%
Trinity Industries $138 $-19 -14% Miscellaneous manufacturing
UGI $550 $-3 0% Utilities, gas and electric
United States Steel $432 $-40 -9% Metals & metal products
Whirlpool $717 $-70 -10% Electronics, electrical equipment
Wisconsin Energy $1,139 $-218 -19% Utilities, gas and electric
Xcel Energy $1,434 $-34 -2% Utilities, gas and electric

Legal Tax Breaks Contribute to Companies’ Low Taxes

There are a variety of ways in which companies can avoid paying or “zero out” their federal income taxes. Tax credits being one such way.

As GoodJobsFirst.org explains, “Tax credits are economic development subsidies that reduce a company’s taxes by allowing it to deduct all or part of certain expenses from its income tax bill on a dollar for dollar basis.

“Tax credits are usually granted for a particular kind of corporate activity a state wants to promote. Investment tax credits, which allow companies to subtract from their tax bill amounts spent on new facilities and/or equipment, are a boon for capital-intensive manufacturing industries. Research and development (R&D) credits are especially lucrative for pharmaceutical and high-tech companies.”

According to the ITE report, in 2018, Netflix claimed $140 million in research and development (R&D) tax credits, Rockwell Collins reported $60 million, and Activision Blizzard claimed $46 million. CMS Energy recorded research and experimentation (R&E) credit – a tax credit that is often criticized for giving companies “research” tax breaks in areas such as video games or fast food packaging, or awarding “research” the company would have done anyway.

Prudential Financial lowered its taxes by $111 million by using a variety of credits, including low-income credits, and Eli Lilly gained $87 million in business credits. Dominion Energy reported $59 million in investment tax credits.

Another way companies avoid paying federal income taxes is through various stock options. This tax break lets companies write off expenses related to stock-option related expenses in excess of the cost they reported to shareholders and the public, as ITEP explained. According to a Citizens for Tax Justice report in June 2016, 315 Fortune 500 companies benefited from this tax break. In 2018, Amazon decreased its income taxes by over $1 billion, and Netflix lowered its income taxes by $191 million by using the stock option tax break.

Several Fortune 500 companies use accelerated depreciation, which allows companies to drastically lower their tax rates by writing off the expense of capital investments more quickly than the investments wear out.

Under the new tax law, accelerated depreciation was expanded to allow companies to deduct a capital investment’s entire cost in its first year. As ITEP found, in 2018, several companies used accelerated depreciation, including Halliburton, Dominion Resources, JetBlue, Ryder, Owens Corning, Devon Energy, Ameren, Delta Airlines, Chevron and Duke Energy. Together, these corporations lowered their 2018 taxes by $8 billion with accelerated depreciation tax breaks.

Corporate Tax Revenues Continue to Decline

Corporate tax revenues fell by 31 percent in fiscal year 2018, according to a U.S. Treasury report. This was perhaps the most abrupt decline in “any year of normal economic growth” in the U.S. ITEP says.

Although the Tax Cuts and Jobs Act (TCJA) lowered the statutory tax rate from 35 to 21 percent in December 2017, there are still loopholes, as ITEP found, that allow these companies to “zero out” their income taxes and keep nearly half of their income from federal taxes.

So, what does ITEP propose doing? For one, ITEP suggests Congress or the SEC require a higher standard of tax disclosure by publicly traded firms as the existing disclosures that are required are vague and do not provide sufficient data to assess how companies are avoiding paying taxes.

With accurate data, lawmakers could “critically assess the costs of each of existing tax break—including those discussed in this report—and take steps to ensure that profitable corporations pay their fair share of U.S. taxes,” as ITEP says.

Support independent news, get our newsletter three times a week.

Tags:
Leighanna Shirey

Leighanna graduated with a degree in English from Pensacola Christian College. After teaching high school English for five years, she decided to pursue her dream of writing and editing. When not working, she enjoys traveling with her husband, spending time with her dogs, and drinking way too much coffee.

    1

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.