If you paid a dollar, a single dollar, in federal income tax in 2020, you paid more than FedEx, Nike, and Houston’s own Kinder Morgan combined. A new study found that at least 55 of America’s largest corporations didn’t pay federal income taxes on billions in profits over the past year. This outrage came not from illegal business, not from boiled books or crooked accountants, but from completely legal loopholes. For that we can thank the First Deadbeat, Donald Trump. The comprehensive tax bill, passed by Republican Congress in 2017 and signed by Trump, lowered the corporate tax rate from 35 percent to 21 percent. But dozens of Fortune 500 companies have been able to further reduce their tax burden – sometimes to zero – thanks to a number of statutory deductions and exemptions. The list of tax evaders reads like a who’s who of American industry: Salesforce, Archer-Daniels-Midland, and Consolidated Edison were also featured in the report produced by the Institute of Taxes and Economic Policy, a liberal-minded study group in Washington.
It wasn’t just last year that they escaped paying taxes. 26 of the listed companies, including Fiserve, Duke Energy, and Dish Network, have avoided paying federal income tax over the past three years despite reporting combined income of $ 77 billion. So they were profitable in 2018, 2019, and 2020, but paid no federal taxes or less in those three years. How did you do that? The usual way things like this are done in Washington: lobbyists with bottomless expense reports and campaign money.
In addition to the 2017 tax cut, we passed the $ 2.2 trillion CARES bill passed last year to help businesses and families weather the pandemic. This included a provision that temporarily allowed companies to use losses in 2020 to offset profits made in previous years. Lobbyists smelled blood and everyone wanted the goodies. As of early 2018, high-ranking officials in Trump’s finance department were inundated with lobbyists trying to make sure their clients were affected by the tax cuts. Get this: The volume of meetings with lobbyists was so intense that some senior tax officials had little time to get their jobs done. The CARES Act was sloppily written, quickly passed and immediately signed. It allowed Trump’s finance department to shape the plot in his own way. “The Treasury Department is pitting the new law,” said Bret Wells, professor of tax law at the University of Houston. “For the most part, it’s the top 1 percent that will benefit disproportionately – the richest people in the world.” Senator Elizabeth Warren said on Twitter, “This is not rocket science: giant corporations reporting billions in profits should not be able to pay $ 0 federal taxes.”
FedEx took advantage of the provisions of the CARES Act and used the losses in 2020 to reduce tax burdens from previous years when the tax rate was higher. These regulations “helped companies like FedEx navigate a rapidly changing economy and market while continuing to invest in capital, hire team members, and fund employee retirement plans.” That sounds good, but follow-up studies have shown that many companies have saved billions by caring for their top executives. They bought discounted future stock options and then deducted their value as a loss. Tricky, but again perfectly legal under the law. Another trick: for years, U.S. companies have actually been hiding their profits by storing them offshore or setting up satellite companies in countries like Ireland and the Bahamas.
This brings us to our favorite saying, “What’s in it for us?” You could be a grocer, so hire a good accountant without any qualms. First, establish yourself as a company. Your spouse and children are the board of directors. You rent a PO box in Bermuda under your company name Monumental Agricultural International (the “international” part comes from the avocados you stack from Mexico) and have your paycheck sent to Bermuda. Since you were laid off for five months in 2020 because of the pandemic, the CARES law allows you to deduct your losses. Deduct the business expenses (your overalls), entertainment (visits to this men’s club) and not only save on taxes but also get a discount. Yes, a discount. The above 55 Fortune 500 companies received a combined tax break of more than $ 3 billion for a tax rate of approximately 9 percent. So Uncle Sam owed them money.
You may be wondering what all of Trump’s tax loopholes are doing to our budget. There are different ways of looking at them, all of them bad. One finding is that the federal government may raise hundreds of billions of dollars less than previously projected over the next decade. Second, the Congressional Budget Office states that the deficit for 2020 is 16 percent of US gross domestic product. This is the largest since 1945. Third, the Trump tax cut reduced revenue by lowering taxes on personal income, small businesses, and businesses. These cuts are expected to add $ 1.5 trillion to debt between 2018 and 2027. Recall that Trump made a promise to eliminate the federal deficit, but the deficit increased more than 60 percent under his presidency and exceeded $ 3 trillion in 2020, partly due to the tax bill. Do not tell your grandchildren what we are doing for their financial future.
So start your own business, hire the right lobbyists and accountants, and … wait. Uncle Joe Biden comes up with his leftist ideas to get everyone to pay their fair share of taxes. He wants to raise the corporate tax rate, get rid of this offshore tax evasion, and use the extra tax dollars to pay for his big project, to pave our roads, cure cancer, and bring eternal peace to the world, or something. Needless to say, Republicans in Congress are fighting with teeth, nails and lobbyists against Biden’s campaign contributions. Deal with your own tax evasion. And don’t drop the avocados.
Ashby pays his taxes at email@example.com