Contact: Jon Whiten ([email protected])
Big corporations have used a temporary policy that lawmakers are considering extending to get huge tax breaks, according to a new analysis from the Institute on Taxation and Economic Policy (ITEP). The new report looks at how much 25 major corporations saved from 2018-2022, and what their effective corporate tax rates have been as a result.
- Tax breaks for “accelerated depreciation,” which were expanded to what’s called “bonus depreciation” starting in 2018 under the Tax Cuts and Jobs Act, have saved nearly $67 billion for 25 of the corporations that benefited most.
- Among the corporations that have benefited the most are household names like Google, Facebook, Intel, UPS, Target, PepsiCo, and the railroads Union Pacific and Norfolk Southern.
- As a result of this and other tax breaks, these companies together paid an effective federal corporate tax rate of just 12.2 percent since 2018 – far below the statutory rate of 21 percent.
- Some corporations have used accelerated depreciation to drive their effective tax rates down to single digits. These include Verizon, Amazon, Walt Disney, Con Edison, General Motors, Dish Network, and others.
- This policy is set to wind down starting this year, but it would be extended under legislation that passed through the House Ways and Means Committee last month.
“Depreciation tax breaks have never been shown to encourage more capital investment,” said Matt Gardner, ITEP Senior Fellow and co-author of the report. “Instead, this giveaway gives hugely profitable corporations tax breaks for doing what they were going to do anyway, with the lion’s share of the benefits going to just a handful of the very largest corporations.”