While everyday Americans are paying taxes, some corporations aren’t paying their fair share, watchdog group says
Five large corporations – including FedEx, Nike, and Duke Energy, which raised prices on consumers last year – paid an average tax rate of negative 11.6 percent and owed a total of negative $636 million in federal income tax in 2020, according to Accountable.US, a watchdog organization. But, these same companies saw net incomes jump to at least $14.5 billion and spent over $27.6 billion on shareholder handouts in 2021.
“How can any big corporation that has effectively paid nothing in taxes and reported massive new profits and generous shareholder rewards honestly say they had no choice but to raise prices so high on consumers?” asked Kyle Herrig, president of Accountable.US.
When corporate profits are at their highest levels in nearly 50 years, it’s time many CEOs admit they’re charging average families well beyond any new costs during the pandemic, Herrig said.
“Corporations can either play a role in the economic recovery – or hold it back by using the pandemic as an excuse to rip off families,” he said. “Highly profitable companies can start taking responsibility by stabilizing prices for consumers instead of padding their bottom line, on top of finally paying their fair share in taxes.”
Clear pandemic profiteering and corporate greed from the big oil, meat packing, shipping, trucking, and railroad companies are making inflation problems worse for everyday families, according to Accountable.US’s research.
Many CEOs have claimed they had no choice but to hike costs on consumers, while turning around to boast of rising profits to investors and rewarding their shareholders with stock buybacks and dividends, Herrig said.
Key points from Accountable.US’s recent report, “Research on Profiteering Corporations That Paid No Taxes,” are:
- 2020: Paid minus $230 million in tax despite nearly $1.22 billion in profit.
- “Secured secret deals” with Luxembourg, a “magical fairyland” for tax avoidance.
- “Lobbied hard” for the 2017 Trump tax cuts, but didn’t increase investment in the year following the cuts.
- 2021: Announced rate hikes and new surcharges on a number of deliveries.
- Reported nearly $3.27 billion in net income in the first nine months of its FY 2022 and over $2.8 billion in shareholder handouts over the same period.
- 2020: Paid minus $109 million in tax despite $2.87 billion in profit.
- “Avoided paying $4 billion in U.S. Taxes” through schemes revealed in the “Paradise Papers.”
- Touted the “strategic and financial” benefits of “full price realization” as it raised prices.
- Reported an additional $389 million in net income in the first nine months of its FY 2022, as it spent nearly $4.28 billion on shareholder handouts.
- 2020: Paid minus $281 million in tax despite $826 million in profit.
- Touted positive results in its FY 2021 from increased rates after working to increase its energy rates in multiple states.
- Enjoyed a 230 percent increase in FY 2021 net income and projected over $3 billion in shareholder dividends in 2022.
Charter Communications Inc.
- 2020: Paid minus $7 million in tax despite $3.68 billion in profit.
- Has repeatedly raised rates on consumers.
- Saw FY 2021 net income soar by $1.4 billion to more than $4.6 billion while it boosted stock buybacks by $4.2 billion to over $15.4 billion.
- 2020: Paid minus $9 million in tax despite $878 million in profit.
- Planned to raise electricity rates by 26 percent for residential customers and 36.4 percent for commercial ones in late 2021.
- Spent nearly $1.3 billion on shareholder handouts in its FY 2021 and was poised to spend $5.3 billion on a major acquisition in early 2022.
Tax breaks allow corporations to earn a negative effective tax rate. That means they earned more in their after-tax income than in their pretax income, often due to tax rebates from the U.S. Treasury.