503. You Pay Taxes; They Don't. Corporations that pay no federal income tax.

        YOU  PAY  TAXES; THEY  DON'T

Corporations that pay no federal income tax

April brings Easter and thoughts of rebirth and growth, but it also brings the dreaded fifteenth, when federal and state income taxes are due.  Most of us grumble, sweat, and pay.  Or hire an accountant who grumbles for us, sweats and (with our money) pays.  But that's not everyone, far from it.  People with low income don't pay; no problem.  Genuine nonprofit organizations, if they don't engage in lobbying, don't pay; no problem.   But how about corporations -- those monster entities that are out to make a profit for shareholders and their richly compensated executives?  How about them?  Some of them, including some of the biggest in the world, quite legally pay nothing, not one skinny cent.  Who are they, and what gives?

Here are the top ten, in terms of their US income (in millions), as of 2018, the last year for which information is available.

Company	U.S. Income
1. Amazon.com	$10,835
2.  Delta Air Lines	$5,073
3.  Chevron	$4,547
4.  General Motors	$4,320
5.  EOG Resources	$4,067
6.  Occidental Petroleum	$3,379
7.  Honeywell International	$2,830
8.  Deere	$2,152
9.  American Electric Power	$1,943
10.  Principal Financial

Some of these are new to me, but others are not.  That Amazon -- that giant of the Internet, the inescapable tyrant monopoly of our time -- should head the list is simply amazing.  That Delta, Chevron, and GM should be there likewise astonishes.  

Mention of John Deere, the manufacturer of agricultural machinery, is of special interest to me, since it has survived and flourished, whereas its no. 1 competitor of many years, the International Harvester Company, the huge blue-chip maker of agricultural machinery, construction equipment, and trucks, did not.  But what is, or was, that to me?  Everything, since my father, an attorney specializing in the complexities of railroad law, worked all his life for Harvester.  In the form of his salary, Harvester money saw my family through the Depression; I was raised on it.  But this massive corporation, dating back to when Cyrus McCormick invented the reaper and made a fortune from it, did not evolve with the times.  By the 1980s a combination of problems brought about its collapse and it ceased to exist under the venerable name "International Harvester."  But Deere, its savvy smaller competitor, is still alive and kicking, as its avoidance of taxes would seem to indicate.  

(Forgive the above digression.  My Midwestern roots incline me to insert Chicagoland stories whenever possible.  The McCormicks of Chicago far surpass the Astors and Vanderbilts of New York in providing juicy scandals to the gossip mills, as I have mentioned at times in the past.  But that, and how my father was the secretary of a railroad that no one outside of Chicago ever heard of, and how and why I, a nerdy bookworm, learned to shoot a shotgun at age 16, are stories for another time.)

So let's return to my subject, giant corporations that quite legally don't pay the federal income tax.  How can this be?  First of all, the Trump tax bill of December 2017 lowered the corporate tax rate from 35% to 21%, which was more in line with tax rates in other developed countries.  Beyond that, it usually involves clever manipulation of deductions and tax credits, to the point where the corporation can claim a rebate to be applied against taxes in future years.  Not that they care to discuss the matter.  Questioned about its tax immunity, for instance, Deere declined to answer.  But the US is notorious for allowing corporations to take advantage of its tax laws.  And corporations have teams of lawyers and accountants who know how to play the game.

"Only little people pay taxes," said Leona Helmsley, the hotel magnate known also as the Queen of Mean.  This remark, cited in her court case, helped get her convicted of income tax evasion and reduced her to tears in pleading for leniency -- to no avail; she ended up in federal prison.  The feds simply could not let her get away with such a comment, undermining as it did the whole federal system of taxation.  But given the immunity of many corporations to the federal income tax, one has to ask: was Leona wrong?  At the very least, she was a fool to say, before witnesses, a truth that others knew to keep to themselves.

Source note: This post was inspired in part by Kathryn Kranhold's article, "You Paid Taxes. These Corporations Don't," published online on April 19, 2019, by The Center for Public Integrity.  The facts cited by the post come from this article.

© 2021 Clifford Browder