If you worked full time in the United States, earning the federal minimum wage of $7.25 per hour for the whole year, working 40 hours per week, your federal income taxes would be around 12% of your income … that is $1,800.00 in tax. However, if you are one of 60 top US companies with total income of $79 billion, your effective tax rate last year was minus 5%. On average, under the recent Trump tax plan, you got a tax refund.
$79 billion in one year and paid absolutely NO income tax whatsoever. Obscene.
These 60 companies which include Amazon, Chevron, General Motors, Delta, Halliburton and IBM, were profitable and yet avoided all federal income tax, according to an Institute on Taxation and Economic Policy (ITEP) analysis released last week. Amazon made $11.2 billion profit in 2018 but has paid NO Federal in come tax in 2017 or 2018. That’s despite an analysis by Fortune which showed that since going public, the company has amassed a total net income over 22 years of $57.8 billion. That is $57,800,000,000 and NO tax.
In the past decade, more than 100 profitable corporations have paid zero or less in federal income taxes, and AT&T, Wells Fargo, JP Morgan Chase, Verizon, and IBM received a total of more than $130B in tax breaks.
No, of course the system is not stacked against small business and the working class. It is obvious that big business needed those Trump tax cuts. What the hell does the minimum wage worker do with all his money anyway.
Because of this gross abuse, Jeff Bezos is now worth more than the GDP of over 125 of the world’s 195 nations.
When President Trump signed the Tax Cuts and Jobs Act (TCJA) in 2017, he said it would curb special-interest tax breaks. But it had the opposite effect, according to the nonpartisan tax institute. Not only did the TCJA lower corporate tax responsibility to 21% (down from 35% in previous years), it also provided the same types of loopholes and arbitrary write-offs as other plans in years past.
This has led to a dramatically widening gap between what corporations pay and what individuals pay. US multinational companies avoid or minimize their US tax by moving their profits around the world. By shifting income geographically and choosing to house it in low-tax areas, a multinational can minimize the U.S. taxes it pays.
For example, say a U.S. multinational decides to buy a supermarket chain in the U.K. for $1 billion. The parent corporation creates a U.K. division but tells the IRS that the new entity is part of the domestic company. But the U.K. will treat it as a separate company. The parent lends the new division $1 billion to buy the chain. The division does so, runs the business, and pays back the $1 billion, with interest, to the parent. To the U.S. it’s all an American company and so the loan payments aren’t income. But the division gets to deduct the interest part from U.K. taxes and the profits are kept overseas.
Another mechanism is to shift intellectual property, including patents, copyrights, trademarks, business processes, and trade secrets, to foreign subsidiaries in low-tax countries. The parent pays royalties to use these to the subsidiaries, even though the parent did most or all of the development. A classic example of IP shifting was Starbucks. Starbucks bought their coffee beans at an inflated price from Starbucks Coffee Trading SARL in Switzerland (a country that doesn’t grow coffee). It also paid a royalty to Alki, a Starbucks-owned U.K.-based company for coffee-roasting know-how.
Opting for various tax credits is a popular strategy and one made possible by Congress. An example is a popular credit for R&D. Under the R&D credit, these expenses aren’t deducted from corporate revenue before calculating tax. Instead, all qualified research and development spending—which can mean working on new products, technologies, software processes, or techniques—is subtracted directly from the total calculated tax. Instead of reducing the total tax by 21% of the R&D expenses, the company gets to reduce taxes by 100% of the expenses.
Seems the only people playing it straight is the American worker.
Tax Day is the day working Americans post their money to Washington, D.C., and profitable US corporations send their money in gold bars to the Cayman Islands