Thirty-nine profitable corporations in the S&P 500 or Fortune 500 paid no federal income tax from 2018 through 2020, the first three years that the Tax Cuts and Jobs Act (TCJA) was in effect. Besides the 39 companies that paid nothing over three years, an additional 73 profitable corporations paid less than half the statutory corporate income tax rate of 21 percent established under TCJA. As a group, these 73 corporations paid an effective federal income tax rate of just 5.3 percent during these three years.
Publications
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report July 29, 2021 Corporate Tax Avoidance Under the Tax Cuts and Jobs Act
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July 7, 2021 The Child Tax Credit in Practice: What We Know About the Payoffs of Payments (Webinar)
Join us for a discussion on why tax credits like the Child Tax Credit (CTC) expansion are good economic policy. You’ll hear from anti-poverty experts on why Congress should extend the policy beyond 2021 and what we can learn from an initiative providing low-income mothers in Jackson, Miss., $1,000 cash on a monthly basis, no strings attached. From theory to practice and what it means for American families, this CTC webinar will provide a unique angle through which to view this transformative policy.
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brief June 17, 2021 ITIN Filer Data Gap: How Changing Laws, Lack of Data Disaggregation Limit Inclusive Tax Policy
Like U.S. citizens, noncitizens who live, work, or invest in the United States must file local, state and federal taxes. But in order to file personal income taxes, they must first be issued a processing number called an Individual Taxpayer Identification Number (ITIN) by the IRS. These numbers are issued to both legal permanent residents and nonresidents who are not eligible for Social Security numbers. ITINs do not imply immigration status, nor can they be used for immigration enforcement purposes, but they can be used to create burdensome barriers that make it difficult for ITIN holders to file taxes and to impose additional eligibility restrictions on benefits that exclude ITIN filers. The time is now to focus on integrating all ITIN filers, regardless of immigration status, into our tax policies. But a lack of information on the ITIN population creates large gaps in our understanding of these filers and the role they play in the U.S. tax system.
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brief May 25, 2021 Income Tax Increases in the President’s American Families Plan
President Biden’s American Families Plan includes revenue-raising proposals that would affect only very high-income taxpayers.[1] The two most prominent of these proposals would restore the top personal income tax rate to 39.6 percent and eliminate tax breaks related to capital gains for millionaires. As this report explains, these proposals would affect less than 1 percent of taxpayers and would be confined almost exclusively to the richest 1 percent of Americans. The plan includes other tax increases that would also target the very well-off and would make our tax system fairer. It would raise additional revenue by more effectively enforcing tax laws already on the books.
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brief May 6, 2021 Effects of the President’s Capital Gains and Dividends Tax Proposals by State
President Biden’s proposal to eliminate the lower income tax rate on capital gains (profits from selling assets) and stock dividends for millionaires would affect less than half of one percent (0.4 percent) of U.S. taxpayers if it goes into effect in 2022. The share of taxpayers affected would be less than 1 percent in every state.
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report April 20, 2021 Not Worth Its SALT: Tax Cut Proposal Overwhelmingly Benefits Wealthy, White Households
A previous ITEP analysis showed the lopsided distribution of SALT cap repeal by income level. The vast majority of families would not benefit financially from repeal and most of the tax cuts would flow to families with incomes above $200,000.
This report builds on that work by using a mix of tax return and survey data within our microsimulation tax model to estimate the distribution of SALT cap repeal across race and ethnicity. It shows that repealing the SALT cap would be the latest in a long string of inequitable policies that have conspired to create the vast racial income and wealth gaps that exist today.
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report April 8, 2021 National and State-by-State Estimates of President Biden’s Campaign Proposals for Revenue
During his presidential campaign, Joe Biden proposed to change the tax code to raise revenue directly from households with income exceeding $400,000. More precisely, Biden proposed to raise personal income taxes on unmarried individuals and married couples with taxable income exceeding $400,000, and he also proposed to raise payroll taxes on individual workers with earnings exceeding $400,000. Just 2 percent of taxpayers would see a direct tax hike (an increase in either personal income taxes, payroll taxes, or both) if Biden’s campaign proposals were in effect in 2022. The share of taxpayers affected in each state would vary from a low of 0.6 percent in West Virginia to a high of 3.5 percent in New Jersey.
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report April 8, 2021 A Proposal to Simplify President Biden’s Campaign Plan for Personal Income Taxes and Replace the Cap on SALT Deductions
In this paper, we describe a tax policy idea that would simplify the proposals President Biden presented during his campaign to raise personal income taxes for those with annual incomes greater than $400,000. Our proposal would replace the cap on state and local tax (SALT) deductions with a broader limit on tax breaks for the rich that would raise more revenue than the personal income tax hikes that Biden proposed during his campaign. Our proposal would also achieve Biden’s goals of setting the top rate at 39.6 percent and raising taxes only on those with income exceeding $400,000.
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April 8, 2021 The High Cost of Corporate Tax Avoidance (Webinar)
When communities thrive, so do corporations. But when profitable corporations build their empires by exploiting the tax code, it is workers, the environment and our communities—not CEOs or shareholders—that are harmed. Amazon posted its highest U.S. profit ever for 2020, an unprecedented year defined by a pandemic. Yet the company sheltered more than half its profits from corporate taxes—legally. While the company may be one of the most recognizable tax avoiders, it’s not an outlier.
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report April 2, 2021 55 Corporations Paid $0 in Federal Taxes on 2020 Profits
At least 55 of the largest corporations in America paid no federal corporate income taxes in their most recent fiscal year despite enjoying substantial pretax profits in the United States. This continues a decades-long trend of corporate tax avoidance by the biggest U.S. corporations, and it appears to be the product of long-standing tax breaks preserved or expanded by the 2017 tax law as well as the CARES Act tax breaks enacted in the spring of 2020.
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report April 2, 2021 Corporate Tax Reform in the Wake of the Pandemic
Read as PDF Note: This report is adapted from written testimony submitted by Amy Hanauer before testifying in person to the Senate Budget Committee on March 25, 2021. In 2020,… -
report March 31, 2021 Taxes and Racial Equity: An Overview of State and Local Policy Impacts
Historic and current injustices, both in public policy and in broader society, have resulted in vast disparities in income and wealth across race and ethnicity. Employment discrimination has denied good job opportunities to people of color. An uneven system of public education funding advantages wealthier white people and produces unequal educational outcomes. Racist policies such as redlining and discrimination in lending practices have denied countless Black families the opportunity to become homeowners or business owners, creating extraordinary differences in intergenerational wealth. These inequities have long-lasting effects that compound over time.
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March 25, 2021 Testimony to Senate Budget Committee on Ending a Rigged Tax Code: The Need To Make the Wealthiest People and Largest Corporations Pay their Fair Share of Taxes
Following is testimony of ITEP Executive Director Amy Hanauer before the Senate Budget Committee to consider “Ending a Rigged Tax Code: The Need To Make the Wealthiest People and Largest… -
report March 7, 2021 Estimates of Cash Payment and Tax Credit Provisions in American Rescue Plan
Update: On March 10, the House passed the Senate version of the COVID relief bill, called the American Rescue Plan Act, and sent it to President Biden for his signature. This means that the Senate version of the bill described herein is the final legislation enacted into law.
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brief March 5, 2021 How Long Has It Been Since Your State Raised Its Gas Tax?
Many state governments are struggling to repair and expand their transportation infrastructure because they are attempting to cover the rising cost of asphalt, machinery, and other construction materials with fixed-rate gasoline taxes that are rarely increased.
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report February 24, 2021 Comparing Flat-Rate Income Tax Options for Alaska
Alaska lawmakers are facing an unprecedented fiscal crisis. The state is more dependent than any other on oil tax and royalty revenues but declines in oil prices and production levels have sapped much of the vitality of these revenue sources. One way of diversifying the state’s revenue stream and narrowing the yawning gap between state revenues and expenses would be to reinstitute a statewide personal income tax. Alaska previously levied such a tax until 1980. This report contains ITEP’s analysis of the distributional impact and revenue potential of a variety of flat-rate income tax options for Alaska, based on draft legislation provided by the Legislative Budget and Audit Committee.
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February 11, 2021 Testimony to Washington State Legislature House Finance Committee on HB 1496
Read as PDF Following is testimony of ITEP Senior State Tax Policy Analyst Dylan Grundman O’Neill submitted to Washington State Legislature House Finance Committee in support of HB 1496. “Hello… -
report January 26, 2021 Child Tax Credit Enhancements Under the American Rescue Plan
President Joe Biden’s coronavirus relief package, the American Rescue Plan, includes a significant expansion of the Child Tax Credit (CTC). The president’s proposal provides a $125 billion boost in funding for the program, which would essentially double the size of the existing federal credit for households with children. Combined with existing law, the CTC provisions in Biden’s plan would provide a 37.4 percent income boost to the poorest 20 percent of families with children who make $21,300 or less a year.
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brief January 15, 2021 ANALYSIS: Cash and Tax Provisions in Biden’s Economic Recovery Plan
The $1.9 trillion economic recovery plan, known as the American Rescue Plan, announced by President-elect Biden contains, among other provisions, expanded cash payments and changes to the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC).
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brief September 25, 2020 State Taxation of Capital Gains: The Folly of Tax Cuts & Case for Proactive Reforms
The federal tax system and every state treat income from capital gains more favorably than income from work. Preferential capital gains tax treatment includes exclusions and seldom-discussed provisions like deferral and stepped-up basis, as well as more direct tax subsidies for profits realized from local investments and, in some instances, from investments around the world. This policy brief explains state capital gains taxation, examines the flaws in state capital gains tax breaks, and proposes reform options that will help make state tax systems more progressive and more equitable.
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September 17, 2020 Webinar: What’s Tax Got to Do With It?
Tax justice is necessary to achieve racial, social and economic justice. We need race-forward tax policies that create opportunity for everyone, demand corporations and the wealthy pay their fair share… -
report September 17, 2020 Illinois’s Flat Tax Exacerbates Income Inequality and Racial Wealth Gaps
Flat or graduated personal income taxes have varying effects on the annual individual tax liabilities of taxpayers at different income levels. Less examined is how tax structures affect income inequality and racial wealth gaps. This brief illustrates how Illinois’s historic flat income tax structure compares to the proposed Fair Tax through a multi-year retrospective analysis. It shows that Illinois’s flat income tax in lieu of a graduated rate tax used by most states amounts to a tax subsidy for the wealthiest Illinoisans that compounds income inequality and racial wealth gaps.
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brief September 15, 2020 Boosting Incomes and Improving Tax Equity with State Earned Income Tax Credits in 2020
The Earned Income Tax Credit (EITC) is a policy designed to bolster the incomes of low-wage workers and offset some of the taxes they pay, providing the opportunity for families struggling to afford the high cost of living to step up and out of poverty toward meaningful economic security. The federal EITC has kept millions of Americans out of poverty since its enactment in the mid-1970s. Over the past several decades, the effectiveness of the EITC has been amplified as many states have enacted and expanded their own credits.
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brief September 15, 2020 Tax Justice is…
Racial justice requires tax justice. Economic justice requires tax justice. Climate and health justice require, yes, tax justice.
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ITEP Work in Action August 26, 2020 South Strong: Racial Equity and Taxes in Southern States
Southern states have a particularly egregious record on tax equity, rooted partly in racism. Lawmakers baked some of the most egregious and anti-democratic tax policies into southern state constitutions, such…