President Donald Trump’s new tax law aided corporations so radically that twice as many companies paid no federal taxes whatsoever in 2018, despite billions of dollars in profit, according to a new study.
Amazon, Netflix, Chevron, Eli Lilly, Delta Airlines, General Motors, IBM and Goodyear were among the tax-free corporate titans, according to an analysis by the Institute on Taxation and Economic Policy, a Washington think tank, released Thursday.
The study found that 60 of some of the largest publicly held companies paid no taxes — compared with an average of about 30 each year from 2008 to 2015, before Trump and congressional Republicans passed the tax law that took effect in 2018. The measure heavily favors corporations and the wealthy.
The analysis is based on 2018 financial filings of the country’s largest 560 publicly held companies.
The companies that paid nothing in taxes were “able to zero out their federal income taxes on $79 billion in U.S. pretax income,” according to the study, first reported by the Center for Public Integrity and NBC News.
Corporations reaped the benefits of a tax rate slashed from 35% to 21% in Trump’s tax law, and exploited various deductions, tax credits and rebates.
“Instead of paying $16.4 billion in taxes, as the new 21 percent corporate tax rate requires, these companies enjoyed a net corporate tax rebate of $4.3 billion, blowing a $20.7 billion hole in the federal budget last year,” the Institute on Taxation and Economic Policy report says.
Farm equipment manufacturer John Deere, for example, reported earning $2.15 billion in U.S. income before taxes. It owed no U.S. taxes in 2018 and reported the government owes the company $268 million because of various deductions and credits, the report says.
The cut in the corporate tax rate alone will save corporations $1.35 trillion over the next 10 years, according to the Joint Committee on Taxation.
As for the nation, revenues from the corporate tax fell by 31% in 2018 to $204 billion.
“This was a more precipitous decline than in any year of normal economic growth in U.S. history,” Matthew Gardner, Institute on Taxation and Economic Policy senior fellow, wrote in the report.
Trump insisted before his law was passed that the corporate tax cut would pay for itself. He argued that the giveback would trigger a boom in business operations that would lead to increased taxes on ballooning income, which would plug the giant hole in the budget.
But it hasn’t worked out that way. The nation’s budget deficit is now the biggest in history.
During his campaign, Trump vowed to eliminate the $19.9 trillion national debt in eight years. Instead, it jumped 41.8 percent in just the first four months of this fiscal year (which runs from October through September).
Trump’s top economic adviser Larry Kudlow insisted Thursday that “economic growth” has already “paid for a good chunk” of the tax cuts. The budget outlook is “not as bad as many people say,” he said.
Bloomberg pointed out that Kudlow’s declaration defies data from his own administration.