Dec 16, 2019

91 Fortune 500 companies paid no federal income tax in 2018

President Trump on Dec. 13. Photo: Alex Wong/Getty Images

91 Fortune 500 companies paid no federal income taxes on their U.S. income last year, according to a report released Monday by the Institute on Taxation and Economic Policy.

Why it matters: Some of the companies that paid no federal income tax last year still made billions of dollars — and they include some of the country's biggest names, like Amazon, Chevron, Halliburton and IBM.

The big picture: The 379 profitable members of the Fortune 500 paid an effective federal tax rate of 11.3% last year — almost half of the 21% corporate rate established under President Trump's 2017 tax revamp.

  • That effective rate was the lowest since the organization began publishing its corporate tax studies in 1984.
  • Large companies were able to pay lower rates through a combination of deductions, tax breaks and other loopholes.
  • Had those companies paid the statutory 21% rate on their profits, they would have collectively owed the federal government an additional $73.9 billion.

The state of play: Despite strong economic growth, the federal deficit is soaring. In the first 11 months of fiscal year 2019, it exceeded $1 trillion and has already hit $342 billion for the first two months of 2020's fiscal year.

  • The lower corporate tax rate isn't the sole driver of the deficit, but it certainly contributes. Corporate tax revenue dropped from about $297 billion in 2017 to $204 billion in 2018.

Go deeper: Tax cuts could be a curse for U.S. companies

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Deficit balloons to $356.6 billion in first quarter of fiscal year

Photo: Bloomberg Creative Photos/Getty Images

The U.S. budget deficit hit $356.6 billion in the first quarter of fiscal year 2020, up 11.8% compared to the same period the previous year, Bloomberg reports.

Why it matters: The deficit, which President Trump pledged in 2016 to eliminate within eight years, is on pace to exceed $1 trillion by the end of 2020. The U.S. has not seen $1 trillion annual deficits since the three years that followed the 2008 financial crisis, per the New York Times.

Go deeperArrowJan 13, 2020

Company tax incentives don't spur economic growth

Illustration: Sarah Grillo/Axios

More than two years after Amazon announced its search for a second headquarters and cities around the U.S. bent over backwards to offer the megacompany as much free cash and incentives as they could, new research confirms what economists have been saying for years: Such programs are a waste of money.

Driving the news: A paper from researchers at Princeton and Columbia Business School found "no evidence" that business tax incentives given to individual companies increased broader economic growth at the state and local level.

Go deeperArrowJan 7, 2020

Warren on economists criticizing her wealth tax: "They're just wrong"

Sen. Elizabeth Warren said at the Democratic debate Thursday that economists who claim her wealth tax proposal would stifle growth and investment are "just wrong."

Why it matters: Warren's riff on the wealth tax, in which she emphasized how "a two cent tax" on fortunes of $50 million and above, has become a core part of her stump speech.

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Keep ReadingArrowDec 20, 2019