- The Institute on Taxation and Economic Policy has examined tax returns of the Fortune 500 for the year 2018.
- The study found that of the 379 profitable companies, 91 paid no federal income taxes.
- A further 56 companies paid rates between 0% and 5%.
A eye popping study by the Institute on Taxation and Economic Policy has revealed the shocking extent of tax avoidance among the Fortune 500.
Amazingly, a full quarter of the profitable companies in the Fortune 500 paid $0 is federal taxes. Companies listed are the largest in the world, generating many billions in profits every year. In 2018, 379 of the 500 companies were profitable, but ninety-one of those companies paid $0 in federal taxes.
The study reveals a further 56 companies paid net rates of between 0% and 5%. The average tax rate actually paid by all profitable corporations in the Fortune 500 for 2018 was 11.3%.
The statutory rate for federal corporate income taxes is currently 21%. This rate was established in 2017, when it was lowered from 35% — a 40% decrease. Using loopholes and tax avoidance techniques, almost no corporations actually pay the statutory rate when all is said and done. This dynamic results in US corporations paying among the lowest income tax rates in the developed world.
The revelation of the extent of corporate tax avoidance comes as income and wealth inequality continue to accelerate and wages stagnate. Despite mounting evidence that higher taxes result in higher growth and employment, corporate tax avoidance continues to be the norm rather than the exception. This pattern has been evident in the US since the time of slavery, and shows no sign of reversing. Policy makers warn that we cannot expect change any time soon unless action is taken.