A new report conducted by the Institute on Taxation and Economic Policy has revealed that more than 55 big American corporations, including FedEx and Nike, failed to pay taxes in the last three years. The report found that despite billions of dollars earned by these companies in profits, they failed to pay taxes for some reasons that are justified in the face of the economic changes occasioned by the COVID-19 pandemic.
In 2017, President Donald Trump signed a tax bill that reduced corporate taxes from 35% to 21%, enabling hundreds of Fortune 500 businesses to even reduce their taxes to zero. This was made possible by several legal deductions and exemptions that are justified in the tax code.
Out of the over 55 large companies, 26 are listed on the stock exchange and these include FedEx, Nike, Duke Energy, and DTE Energy among others. The trio of FedEx, Duke Energy, and Nike posted a combined $77 billion revenue in the last three years but still escaped paying federal income taxes. In fact, many of the reported companies also got tax rebates that amounted to millions of dollars.
It is possible for companies to file their tax returns privately, but those listed on the stock exchange are expected to publicly file their financial reports to even include federal income tax expenses.
The spokesperson for Duke Energy, Catherine Butler, said the company adheres with state and federal tax laws to increase investment rewards for customers. She revealed that the company deferred many of its tax payments to future periods so that customers can invest in renewable energy through bonus depreciation. The company filed in late 2020 that its $9 billion federal tax balance will be paid at some time in the future.
According to Butler, Duke Energy “fully complies with federal and state tax laws as part of our efforts to make investments that will benefit our customers and communities” and that the bonus depreciation “caused Duke’s cash tax obligations to be deferred to future periods, but it did not eliminate them.”
DTE Energy also stated that in the areas of wind and solar energies, federal tax savings are passed on to customers in form of reduced utility bills and this is part of the reasons why federal taxes for three years have been written off for new machinery and equipment purchased for renewable technology.
Based on the $2.2 trillion CARES Act enacted in 2020 to enable businesses and families to deal with the negative effects of the COVID-19 pandemic, organizations are allowed to temporarily write off business losses incurred last year with profits generated in previous years. Many companies such as DTE and FedEx took advantage of that provision to reduce their taxes to even zero.