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Corporations Are Spending Millions on Lobbying to Avoid Taxes

By Josephine Fonger

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FedEx spent $71 million on lobbying and campaign contributions from the 2016 election cycle through the 2020 cycle. How much did it pay in federal corporate income tax? Zero.

Charter Communications spent $64 million on lobbying and campaign contributions during the same period. How much did it pay in federal corporate income tax? Also zero. 

Nike spent $8 million on lobbying and campaign contributions, but similarly completely avoided paying federal corporate income tax.

That’s right, if you paid even a single dollar in federal taxes last year, you contributed more than FedEx, Charter, Nike and 52 other major corporations. 

The 55 largest corporations that paid $0 in federal corporate income taxes in 2020 spent $450 million on lobbying and political contributions in recent years, according to a Public Citizen report. This enormous influence allows major corporations to influence legislation and block progress on important issues, while the American people that rely on these reforms are forced to carry the tax burden.

How Does This Happen?

The U.S. tax system is littered with loopholes that allow corporations to exploit tax breaks. In 2020, Charter Communications used a tax break for executive stock options that allowed it to write off stock-option related expenses and Nike used the federal research and experimentation (R&E) credit to reduce its income taxes. DTE Energy used a renewable energy tax break as part of its efforts to avoid paying any federal income taxes. 

The CARES Act of 2020 was created to help the many Americans and businesses struggling during the pandemic get back on their feet. The CARES Act allowed businesses to “carry back” losses from previous years to offset their reported profits and obtain a rebate to cover their 2020 tax expenses. Major corporations exploited this loophole to evade payments that would have contributed to economic recovery.

Not only were the 55 corporations in our report exempt from paying taxes, but they also received money back from the government through tax rebates. In addition to the $8.5 billion in tax avoidance, these companies received $3.5 billion in rebates. One could argue that the federal government is funding the lobbying interests of these corporations for years to come; 34 of the 55 companies could use their 2020 surplus tax rebate money to fund their political spending for the next 10 years. In essence, corporations are getting paid by the government to lobby against us.

The interests funded by corporate lobbying are directly preventing reform on the issue of corporate tax avoidance. The vicious, never ending cycle of tax dodging and political spending keeps the wealthy in control. For example, the Tax Cuts and Jobs Act of 2017 lowered the corporate tax rate from 35% to 21%. It is no surprise that 22 of the 55 companies lobbied on this bill, with an additional 13 companies lobbying on other tax issues. 20 of the top 25 recipients of money from the 55 corporations are Republicans. This results in a catch-22 situation where corporations can avoid taxes while saving their funds for donations to politicians that keep these tax loopholes in place. 

CEOs Also Go Tax Free

It’s not only the corporations themselves that go through great lengths to avoid taxes — so do  their CEOs. In 2018, Tesla founder Elon Musk paid no federal income taxes. Former Amazon CEO Jeff Bezos did the same in 2007 and 2011. The wealthy have gamed the system to avoid contributing to society’s interests, unlike the rest of us that have to carry the load. 

The median American household earns around $70,000 a year and pays 14% in federal taxes. However, from 2014 to 2018, the richest 25 people only paid 3.4% in federal taxes. Billionaires have rigged the system to exploit the working class while they sit back and reap the rewards. While many individuals and businesses around the country struggled during the pandemic, billionaires did not. In fact, U.S. billionaires increased their wealth by an eye-popping $1.62 trillion between March 2020 and April 2021. 

Instead of fleeing to space, these billionaires should be required to pay their fair share of federal taxes to help invest in the future. Don’t forget, Bezos has enough wealth to end hunger in the U.S. seven times over. It’s time we use some of this exuberant wealth for good. 

The tax lobbyists and lawyers of these corporations and billionaires defend them by pointing out that their pandemic profiting and tax avoidance is legal. But that’s exactly the problem. Our country has created a system that allows the rich to avoid federal income taxes while wielding political spending to keep the tax system rigged.  

Paying Their Fair Share

Tackling corporate greed is not easy, but it is essential to reducing the influence of big business in government that blocks progress on the nation’s most pressing issues. Biden should establish a 15% minimum tax on the profits that corporations report to their shareholders in order to ensure that companies cannot completely escape paying federal income taxes. This policy would raise $150 billion over the next ten years and help strengthen American communities and the economy. However, a minimum tax is only the beginning. Coupled with other measures, like curbing offshore tax dodging and raising the corporate tax rate, the Biden administration can hold corporations accountable and ensure they contribute their fair share to the country’s best interests. 

Topics

Making Government Work: Corporate Influence in Government, Tax & Budget

Protecting Democracy: Money in Politics

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