55 Companies Pay No Taxes – and There is a Reason Why

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A tweet by President Biden on October 20, 2021, got my attention: "Here's the deal: If you spent $3 on your coffee this morning, that's more than what 55 major corporations paid in taxes in recent years." The president has used this statistic in speeches or interviews 10 times since April, when the Washington Post ran a story headlined, "Dozens of America's biggest businesses paid no federal income tax—again."

If your immediate reaction is outrage, you are in good company.

Scores of politicians around the nation are also requoting this statistic as evidence that we need to immediately pass punishing legislation raising taxes on these U.S. corporations that are avoiding paying their “fair” share of taxes on their profits because of legal, but unfair, manipulation of the tax code afforded only to wealthy corporations. The thought that average taxpayers are paying more in taxes than some of America’s largest corporations screams of corruption and unfairness.

These headlines are not new. In 2019, the Center for Public Integrity reported, "At least 60 companies reported that their 2018 federal tax rates amounted to effectively zero, or even less than zero."

How do those companies get away with this?

First, while the headlines may give the impression that the same corporations chronically pay no taxes, year after year, an investigation shows this is not the case. According to an article, "10 Common Tax Myths, Debunked," from the Tax Foundation, "It’s true that in some years, certain corporations, often those that appear profitable, pay zero federal income taxes. That’s not due to any tricks or 'loopholes' though. There are several legitimate reasons why a 'profitable' corporation should not pay income taxes."