After two years in which Jeff Bezos paid almost no taxes, Amazon paid just 9 percent tax last year, well below the percentage paid by working-class Americans. | AP
WASHINGTON – If taxes are the "price" we pay to ensure that government can help create a civilized and manageable society, recent reports show that top companies and the ultra-rich are getting society's services virtually free while the rest of us pay for the freight.
To be precise, the Institute of Taxes and Economic Policy (ITEP) reported that 55 of the largest US publicly traded companies, all on the Fortune 500, paid no or less income tax in 2020. Most of them received refunds.
Together, these companies had $ 40.5 billion in pre-tax income and would have paid $ 8.5 billion in federal taxes under tax law at the now-low corporate rate of 21%. Democratic President Joe Biden plans to increase the rate to 28% to fund infrastructure – which would benefit businesses and the rest of us.
Instead, those 55 zip codes paid and received a combined $ 3.5 billion in refunds. And three of them – Nike, FedEx, and Duke Energy – haven't paid taxes since Donald Trump, resident of the GOP Oval Office, and the GOP-led Congress passed their huge tax cut for businesses and the rich in 2017. Together, these three companies generated $ 18.89 billion in profits and $ 2.845 billion in refunds as of 2017.
In order not to be outdone, the top 1% of individual taxpayers also avoided paying their fair share, according to the National Bureau of Economic Research (NBER). Their tactics included total underreporting 21.8% of their income and tax havens for much of the rest, the authors added.
That circumvention also added up to money … a lot of it: "We estimate 36% of unpaid federal income taxes are owed by the top 1%," said NBER researchers, using data from the Internal Revenue Service. "Collecting all federal income tax on this group would increase federal revenues by $ 175 billion annually."
The numbers for both reports may be low.
NBER noted that its data on individuals does not cover the income of ultra-rich protection from US taxes in offshore ports like the Cayman Islands and other methods they use to hide their treasures. And data from other sources of income such as real estate are fuzzy.
"Many of our estimates are likely conservative about general circumvention at this point," the paper's authors note before listing other tax evasion devices that their paper could not even touch due to the incomplete or estimated numbers. "We should expect a sophisticated bypass to focus on the distribution of income and wealth."
And ITEP told the Senate Budget Committee that its report only covers publicly owned Fortune 500 companies. Privately owned persons or persons below this top level are not included.
None of the reports addressed the corrosive effects of such circumvention and avoidance on income inequality and trust in the government. Progressive, led by Sens. Elizabeth Warren, D-Mass., And Bernie Sanders, Ind-Vt. "The system is tampered with," Warren often explains. The Senate's rules help manipulate this, the AFL-CIO adds.
"For decades the working people have paid the price for the first corporate government," said Federal President Richard Trumka on March 11th.
Corporations, he added, used the Senate filibuster to obtain and expand their tax breaks. The rules “never hold up billions in bailouts or trillions in tax dollars. Only when working families demand our fair share do those in power hide behind the proceedings. "
What Trumka didn't say, but progressive groups – and some lawmakers – have been repeating for years, is that the capitalist system is giving corporate moguls their billions, which they then use to manipulate politics to further expand their profits. The money from these kingpins comes from the productivity of the workers.
Sanders said in a recent statement that the time has come to eradicate the inequality revealed in the reports, although his contribution preceded their findings. The vehicle, he explained, is “a second law of reconciliation that addresses the major structural changes our country desperately needs.
"We have to address the grotesque income and wealth inequality and create a country that works for everyone, not just the few," he added.
In addition to creating jobs, renewing infrastructure, promoting renewable energies, and combating climate change, this move must also “get the richest Americans and most profitable companies to pay their fair share of taxes.
“We cannot continue to allow profitable companies like Amazon to earn billions in taxes and not pay federal net income taxes. And billionaires are not allowed to pay a lower tax rate than working class Americans. We need real tax reform. "
The institute uses data from the Organization for Economic Cooperation and Development, the club of the so-called "rich" countries, to show how much is needed. The charts show that US companies are not paying the freight for government services that benefit them or us.
In 2016, the year before the Trump GOP tax cut, US companies paid a total of 1.9% of gross domestic product in federal taxes, ITEP Executive Director Amy Hanauer said last month when she testified before Sanders' Senate Budget Committee . Among 36 nations mapped by the OECD, this proportion was only ahead of Turkey, Poland, Slovenia and the three Baltic republics.
After the Trump GOP tax cut in 2019, U.S. corporate tax payments fell to 1% of GDP, ahead of just Hungary (0.7%), Latvia (0.2%) and Greece (zero).
And everything was perfectly legal, adds the institute's report.
"For decades, the largest, most profitable US corporations have found ways to protect their profits from federal income taxes," starting with the Reagan administration's misguided tax cut experiment.
"Now that most companies are reporting their third year of earnings under the new corporate tax laws enforced by Trump and the GOP, it's crystal clear that the 2017 law" didn't address – and may have closed – loopholes that allow tax evasion is worse. "
Last March's Cares Act – the first Congressional stimulus law designed to prevent a total crash due to the coronavirus pandemic and its forced closure – opened another major loophole, Hanauer said in her prepared testimony.
This law “relaxed the rules for treating losses not only in 2020 but also retrospectively for those losses reported in 2018 and 2019 that were unrelated to the pandemic. Worse, it allows companies to carry losses back for up to five years. Taxing profits at one rate and enabling savings at a higher rate is an invitation for businesses to play games and postpone profits and losses from year to year on paper in order to lower their tax burdens. "
The generosity continues, the institute adds in another report. Across the country – it seems – products are being shipped from Amazon, films are being rented on Netflix or zoomed in to communicate when face-to-face business meetings and school classrooms have to close due to the coronavirus pandemic.Three companies soared. Your taxes didn't.
"The profits of Zoom rose in 2020 by 4000% – that is not a typo – to 660 million US dollars compared to 16 million US dollars in the previous year," said Hanauer. Netflix paid 1% of its tax profits in 2018, zero in 2019, and 1% last year when so many people were forced to rent its movies that it grossed $ 2.8 billion. That's more than the $ 2.5 billion won over the past two years combined.
And Amazon, led by Jeff Bezos, the richest man in the United States, made $ 20 billion in the past year, this report added. “But the company only paid 9.4% of its profits in federal corporate taxes, after paying zero in 2018 and about 1% in 2019. In those three years combined, it paid federal corporate income taxes of 4.3% of its $ 44.7 billion on profits, ”Hanauer said.
Although Hanauer didn't say so, Amazon's profits don't flow to its employees.
The giant corporation pays its hundreds of thousands of "employees" low wages and often only the federal minimum wage of $ 7.25 an hour. And Amazon has taken its frontline warehouse workers off paying for the pandemic threat after just three months. She also denies the ravages of the pandemic among her staff, only admitting under pressure last November that 20,000 were infected that month.
That rejection, as well as Amazon's profits and Bezos' wealth made through the exploitation of its employees, led the employees of the Amazon warehouse in Bessemer, Ala., To engage with the Retail, Wholesale and Department Stores Union / UFCW to merge. Despite vicious anti-union tactics at Amazon, the 5,805 workers, most of them black, were voting by mail by March 29. The results are expected in the near future.
Hanauer made another point: Tax avoidance is a roadmap for remedying it.
“The good news is that the staggering tax avoidance of these three companies opens a clear path for policymakers to major tax reform as President Biden and the leaders of Congress express their intention to re-examine the corporate tax reform issue. If the legislature wants to change this, he just has to take care of his own manual labor so as not to curb tax breaks in the past, ”she said.
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