Corporations paid 11.3 percent tax rate last year, in steep drop under Trump’s law
By Jeff Stein and
Christopher Ingraham
Dec. 16, 2019 at 12:31 p.m. EST
About 400 of America’s largest corporations paid an average federal tax rate of about 11 percent on their profits last year, roughly half the official rate established under President Trump’s 2017 tax law, according to a report released Monday.
The 2017 tax law lowered the U.S. corporate tax rate from 35 percent to 21 percent, but in practice large companies often pay far less than that because of deductions, tax breaks and other loopholes.
In the first year of the law, the amount corporations paid in federal taxes on their incomes — their “effective rate” — was 11.3 percent on average, possibly its lowest level in more than three decades, according to a report by the Institute on Taxation and Economic Policy, a left-leaning think tank.
From 2008 to 2015, under the previous tax code, the corporations’ effective rate was about 21 percent, according to ITEP’s prior research.
The report also found that 91 corporations in the Fortune 500, many worth billions of dollars, paid no federal taxes last year.
The findings come amid an explosion in the federal deficit, which this year rose to almost $1 trillion. In October, the U.S. Treasury Department announced the deficit had grown $205 billion, or 26 percent, in the past year, an unusual occurrence during a period of strong economic growth.
Corporate tax revenue fell markedly during the first year of the tax law, from about $300 billion in 2017 to $204 billion in 2018, according to federal data, although it increased slightly from 2018 to 2019.
“When drafting the tax law, lawmakers could have eliminated special breaks and loopholes in the corporate tax to offset the cost of reducing the statutory rate,” the report says. “Instead, the new law introduced many new breaks and loopholes, though it eliminated some old ones.”
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