California News Service
SACRAMENTO, Calif – Last year, the federal government took in $79 billion fewer corporate tax dollars than it would have before the 2017 Trump tax reforms took effect, according to a new report.
Researchers with the nonprofit Institute on Taxation and Economic Policy evaluated the profits of 279 Fortune 500 companies and found that, even though the law lowered the tax rate from 35% to 21%, corporations paid on average just 11.3%.
Report co-author and ITEP Senior Fellow Matthew Gardner says that’s because the tax bill failed to eliminate huge loopholes.
“That’s big news because part of the point of cutting corporate tax rates was supposed to be that we could broaden the base,” says Gardner. “Make it so that the legal tax rate is what companies actually end up paying. That doesn’t seem to be happening.”
Instead, the report found 91 corporations that paid no federal taxes, including California-based Chevron, plus Amazon, Halliburton and IBM.
The Trump administration insisted the change would bring millions in offshore profits back to the U.S. and spur more job creation. But the report found instead, companies for the most part chose to execute large stock buybacks – which benefit shareholders, not employees.
And Gardner says it’s all perfectly legal. Corporations are simply taking advantage of the tax breaks that they lobbied Congress to get.
“So, it would take a real change of heart among elected officials to turn around and fix this problem,” says Gardner. “But you know, the ‘glass half-full’ argument is that they broke it, they can fix it.”
The authors suggest that Congress repeal full expensing of capital investments, and limit the ability of tech and other companies to use executive stock options to reduce their taxes by generating “costs” that far exceed what companies actually incur.