The Walmart corporation announced this week that it will increase its minimum wage to $11 an hour, in a move that the company attributed to the major corporate tax cut signed into law by President Trump last month. The $300 million the company will spend on the wage boost is just a fraction of the more than $2 billion a year ITEP estimates Walmart could net from the corporate tax rate cuts that took effect January 1—but even so, the company felt the need to make the wage boost more affordable by simultaneously closing 63 Sam’s Club stores and laying off thousands of employees. For all the press fanfare surrounding the wage announcement, the quiet layoffs are likely a more meaningful indicator of what awaits the American worker in the wake of the Trump tax cuts.
Matthew Gardner
Matt Gardner is a senior fellow at ITEP where he has worked since 1998. He previously served as ITEP’s executive director from 2006 to 2016. Matt’s work focuses on federal, state and local tax systems, with a particular emphasis on the impact of tax policies on low- and moderate-income taxpayers. He uses ITEP’s microsimulation model to produce economic projections and analyses on the effects of current and proposed federal and state tax and budget policies.
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blog January 12, 2018 Walmart’s Minimum Wage Hike: Did the Tax System Make Them Do It?
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blog January 11, 2018 Using Private Debt Collectors as a Substitute for the IRS Is a Bad Deal
If President Trump is indeed a deal maker, then he should dismantle Congress’s decision to rely on private debt collectors as a substitute for the Internal Revenue Service. This decision, championed for years by Sens. Charles Grassley, R-Iowa, and Chuck Schumer, D-New York, is a lousy deal for everyone–American taxpayers, the federal government–except private debt collectors.
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blog January 10, 2018 New Tax Breaks for Craft Beer Are a Drop in the Barrel: 76 percent of Tax Bill’s Beer Tax Cut Goes to a Handful of the Biggest Producers
The $1.5 trillion tax cut that took effect on Jan.1 was never really going to be about small businesses, despite President Trump’s transparently false claims to the contrary. However, one economic sector still appears happy, for now, to hoist a mug to Congress’s successful sleight of hand: craft breweries.
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blog January 9, 2018 New Tax Law Allows Affluent Taxpayers to Write off K-12 Private School Tuition
Taxpayers are still learning about the intended and unintended consequences of the major tax overhaul that Republican leaders ramrodded through late last year. One little-noted provision subverts state laws that… -
blog December 22, 2017 Corporate America, You Just Got a $650 Billion Tax Cut! What Are You Going to Do Next?
While many Fortune 500 CEO’s likely had to restrain themselves from preemptively shouting “we’re going to Disneyland” in an homage to the Disney Corporation’s trademark ad spot involving the winner of each year’s Super Bowl, it’s pretty understandable that several of them—including known tax avoiders AT&T, Boeing, Comcast and Wells Fargo—would preemptively make grandiose promises that they will reserve part of their tax cuts for the little people who made it all possible.
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blog December 18, 2017 Corker Claims Provisions Benefiting Him Could Not Have Changed His Vote Because He Never Read the Bill
Many Republicans who had previously claimed to be deficit hawks have been cheerfully supportive of major tax-cutting legislation as it has moved forward this fall. But one Republican Senator, Bob Corker of Tennessee, has taken a defiant stance on the issue, insisting that “passing off increased debt to future generations” would be a deal-breaker for him. When the Senate passed its version of the tax plan last week, Corker was the only Republican to vote No.
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report November 6, 2017 Analysis of the House Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act, which was introduced on Nov. 2 in the House of Representatives, would raise taxes on some Americans and cut taxes on others while also providing significant savings to foreign investors.
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report October 17, 2017 Offshore Shell Games 2017
This study explores how in 2016 Fortune 500 companies used tax haven subsidiaries to avoid paying taxes on much of their income. It reveals that tax haven use is now standard practice among the Fortune 500 and that a handful of the country’s biggest corporations benefit the most from offshore tax avoidance schemes.
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report September 6, 2017 Turning Loopholes into Black Holes: Trump’s Territorial Tax Proposal Would Increase Corporate Tax Avoidance
The problem of offshore tax avoidance by American corporations could grow much worse under President Donald Trump’s proposal to adopt a “territorial” tax system, which would exempt the offshore profits of American corporations from U.S. taxes. This change would increase the already substantial benefits American corporations obtain when they use accounting gimmicks to make their profits appear to be earned in a foreign country that has no corporate income tax or has one that is extremely low or easy to avoid.
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blog August 31, 2017 Trump (Sort of) Used Our Data on Corporate Tax Avoidance, But He Missed the Point
On Wednesday, reporters waiting to write about President Trump’s much-ballyhooed tax reform speech in Missouri received a fact sheet from the White House informing them that, “Fortune 500 corporations are holding more than $2.6 trillion in profits offshore to avoid $767 billion in Federal taxes, according to the Institute on Taxation and Economic Policy.”
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blog August 23, 2017 GOP Leaders Tout Corporate Tax Cuts at Boeing and AT&T, Companies that Already Have Single-Digit Tax Rates
House Speaker Paul Ryan plans to visit a Boeing factory in Washington State tomorrow to promote the GOP’s ideas for tax reform, which include a deep cut in the corporate tax rate, while House Ways and Means Chairman Kevin Brady is bringing the same message today to employees of AT&T in Dallas. What is unclear is how much lower taxes for these companies can possibly go.
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blog August 4, 2017 How to Think About the Problem of Corporate Offshore Cash: Lessons from Microsoft
For a corporation with deeply American roots, Microsoft seems remarkably unable to turn a profit here. Against all odds, the Redmond, Washington-based company continues to claim that virtually all its earnings are in foreign countries. Microsoft’s latest annual report, released earlier this week, shows that over the past two years, the company enjoyed worldwide income of almost $43 billion. It claims to have earned just 0.3 percent of that—$128 million—in the United States.
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blog July 27, 2017 Reviving U.S. Manufacturing, One Cheesecake Factory at a Time
In the latest example of how the tax code has been abused and distorted, the Cheesecake Factory is claiming the manufacturing tax deduction, apparently for manufacturing cheesecakes, burgers, and other treats.
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blog July 21, 2017 Tax Avoidance: Nike “Just Did It” Again, Moving $1.5 Billion Offshore Last Year
The Nike Corporation’s annual financial disclosure of income tax payments is always notable for two recurring trends: the Oregon-based company’s steady shifting of profits into offshore tax havens, and Nike’s apparent effort to conceal how it’s achieving this tax avoidance. This year’s report, released earlier this week, is no exception.
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report July 20, 2017 Trump’s $4.8 Trillion Tax Proposals Would Not Benefit All States or Taxpayers Equally
The broadly outlined tax proposals released by the Trump administration would not benefit all taxpayers equally and they would not benefit all states equally either. Several states would receive a share of the total resulting tax cuts that is less than their share of the U.S. population. Of the dozen states receiving the least by this measure, seven are in the South. The others are New Mexico, Oregon, Maine, Idaho and Hawaii.
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blog July 18, 2017 FedEx Pays Just 7.5% of Its Profits in Taxes While Pushing for a Lower Corporate Tax Rate
The latest annual financial report released by shipping giant FedEx is yet another reminder that where you stand often depends on where you sit.
The report shows that last year FedEx paid a 7.5 percent federal income tax rate on nearly $3.6 billion of U.S. pretax income and this low rate is due in part to accelerated depreciation, a provision in the tax code that allows the company to write off capital investments faster than they wear out. It’s not surprising, then, that FedEx’s leadership is currently promoting a tax plan that would drop the company’s statutory tax rate even more, and allow it to write off capital investments even faster.
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blog May 4, 2017 Apple: A Case Study in Why a Tax Holiday for Offshore Cash is Indefensible
The Apple corporation made waves earlier this week with its disclosure that its worldwide cash now exceeds $250 billion. Less noticed was a separate disclosure on Wednesday that the company’s… -
report April 27, 2017 3 Percent and Dropping: State Corporate Tax Avoidance in the Fortune 500, 2008 to 2015
The trend is clear: states are experiencing a rapid decline in state corporate income tax revenue. Despite rebounding and even booming bottom lines for many corporations, this downward trend has become increasingly apparent in recent years. Since our last analysis of these data, in 2014, the state effective corporate tax rate paid by profitable Fortune 500 corporations has declined, dropping from 3.1 percent to 2.9 percent of their U.S. profits. A number of factors are driving this decline, including: a race to the bottom by states providing significant “incentives” for specific companies to relocate or stay put; blatant manipulation of loopholes in state tax systems by corporate accountants; significant cuts in state corporate tax rates; and the erosion of state corporate tax bases, largely due to ill-advised state-level linkages to the federal system.
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blog April 27, 2017 President Trump’s Corporate Tax Outline: At Least He Didn’t Use a Napkin
The most complimentary thing that can be said about the corporate tax changes outlined by President Trump earlier this week is that they weren’t scribbled on a napkin. Unlike supply-side… -
blog April 25, 2017 Does a 15 Percent Corporate Tax Rate Sound Low? For Dozens of Major Corporations, Maybe Not
President Donald Trump has promised to release new details Wednesday on what he says could be “the biggest tax cut we’ve ever had.” While much is unclear about the shape… -
report April 13, 2017 Who Pays Taxes in America in 2017?
All Americans pay taxes. Most of us pay federal and state income taxes. Everyone who works pays federal payroll taxes. Everyone who buys gasoline pays federal and state gas taxes. Everyone who owns or rents a home directly or indirectly pays property taxes. Anyone who shops pays sales taxes in most states.
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report April 13, 2017 Fifteen (of Many) Reasons We Need Corporate Tax Reform
Profitable Fortune 500 companies in a range of economic sectors have been remarkably successful in manipulating the tax system to avoid paying even a dime in tax on billions of dollars in U.S. profits. This ITEP report examines a select, diverse group of 15 corporations’ tax situations to shed light on the widespread nature of corporate tax avoidance. As a group, these companies paid no federal income tax on $21 billion in profits in 2016, and they paid almost no federal income tax on $111 billion in profits over the past five years. All but one received federal tax rebates in 2016, and almost all paid exceedingly low rates over five years.
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report April 4, 2017 Testimony before the Alaska House Labor & Commerce Committee On House Bill 36
Thank you for the opportunity to testify on the changes House Bill 36 would make to Alaska’s tax treatment of pass-through income. The taxation of pass-through business entities has been a focal point of state and federal tax reform debates for over a quarter century, with a dual focus on minimizing the role of tax laws in determining the choice of business entity and on ensuring that the income of all business entities is subject to at least a minimal tax. My testimony makes two main points:
1. Alaska is one of a small number of states that do not currently impose either an entity-level tax or a personal income tax on the income generated by pass-through businesses. 2. But Alaska fully taxes the income of traditional C corporations, creating a clear incentive for businesses to structure as pass-throughs to avoid income tax.
In the absence of a statewide personal income tax, imposing an entity-level tax on the net income of pass-through businesses, as HB36 would do, is a straightforward approach to leveling the playing field between different types of business entities, while ensuring these businesses help to fund public investments. -
news release March 31, 2017 New Analysis Compares Tax Rates Paid by Companies Lobbying for/against Border Adjustment Tax
An Institute on Taxation and Economic Policy analysis finds that, on average, companies that are opposed to the Border Adjustment Tax pay higher tax rates than a coalition of companies… -
report March 28, 2017 Fortune 500 Companies Hold a Record $2.6 Trillion Offshore
All told, Fortune 500 corporations are avoiding up to $767 billion in U.S. federal income taxes by holding more than $2.6 trillion of “permanently reinvested” profits offshore. In their latest annual financial reports, 29 of these corporations reveal that they have paid an income tax rate of 10 percent or less in countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens.