President Trump’s sweeping 2017 tax reform law substantially lowered the corporate tax rate, yet a large proportion of Fortune 500 companies paid an effective rate that was nearly half of what was expected of them, new research shows.
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A number of companies — including Amazon to Starbucks and Chevron — appear to have evaded federal income taxes entirely in 2018, according to an Institute on Taxation and Economic Policy study released on Monday,
Amazon, which has specifically been targeted for not paying federal income taxes, has previously told FOX Business that it pays everything required of it both at home and abroad.
The study looked at 379 Fortune 500 companies that were profitable in 2018 and provided enough information to calculate the share of pretax profits paid in federal income taxes that year – the first subject to the Tax Cuts and Jobs Act.
The tax law lowered the corporate rate to 21 percent, but the average federal income tax rate paid by the 379 companies examined was 11.3 percent. About 56 companies paid rates between 0 and 5 percent. The average rate was 2 percent.
But 91 companies paid no federal taxes on their income. Their average tax rate was negative 5.9 percent, indicating they actually received a refund.
“Corporate tax revenues are also now nearing a historic low as a share of the U.S. economy,” researchers wrote.
Collectively, all 379 companies received $73.9 billion worth of tax subsidies. Just 25 companies received the bulk of those subsidies – or $37.1 billion. Bank of America received the highest amount of tax subsidies, followed by JPMorgan Chase, Wells Fargo, Amazon and Verizon.
Among the methods companies used to lower their tax bills were taking advantage of the full, immediate write off of capital expenditures, excess stock-option tax benefits and other industry-specific tax breaks.
On the flip side, 57 companies paid tax rates that were in excess of 21 percent.
Click here to read the report which includes a list of companies that did not pay 2018 federal income taxes, according to the institute's study.