Last week ITEP published a list of 88 profitable corporations that reported paying zero federal income taxes on their 2025 U.S. income, in no small part due to the corporate tax cuts pushed through by the Trump administration and a Republican Congress in 2017 and 2025. The report’s methodology is straightforward: it simply republishes a few data points the companies themselves disclose in their 10-K annual financial reports. Even so, a handful of observers took the opportunity to make halfhearted objections to our analysis.
One of the zero-tax companies, CVS, emailed some Congressional offices to warn that our claims about the company’s 2025 federal tax bill are “not true.” As evidence of this, the company highlights a data point in the company’s annual report, labelled “income taxes paid, net of refunds received,” which is (gasp) larger than zero.
CVS’ response (which they chose not to share with us directly) falls squarely in a long tradition of corporate responses to this work that could best be summarized as “Squirrel!” That is, when confronted with the completely accurate observation that their own annual reports disclose an estimated current federal income tax expense of zero on current-year income, the companies will desperately point to something else entirely.
Sometimes it’s taxes they’ve paid in the past, or will pay in the future, or paid this year to some other country, or paid this year on income from a prior year. Anything, in other words, rather than admit that what we’ve said is factually correct. CVS’ specific take is that even if current federal tax is zero, its worldwide cash income tax is not, meaning they wrote checks to some government somewhere in 2025. (A representative of PayPal made a very similar objection in a direct email communication.)
But this is a non-sequitur. Current federal income tax expense is defined by the Financial Accounting Standards Board (FASB), the agency responsible for setting reporting standards in the 10-K, as “the estimated taxes payable or refundable on tax returns for the current year.” CVS’ current federal income tax expense, as reported in the 10-K released just over two months ago, is less than zero.
As of this moment, the company appears to still believe this is true, as their online annual report clearly shows. But if that is no longer the company’s best estimate of its estimated federal income tax liability on 2025 income, then CVS should file an amended 10-K to inform the SEC and its shareholders rather than sending oblique emails to Congressional staffers.
Cash income tax, by contrast, is simply the cumulative value of the checks a company wrote during a fiscal year. Even in normal years, cash income tax payments don’t have to bear any connection to a company’s current-year income at all. And 2025 was emphatically not a normal year: any company that had substantial offshore holdings prior to the 2017 federal tax cut was required to pay a transition tax under a multi-year installment plan that wrapped up (for most companies) in 2025. A year from now when we’re looking at 2026 data, the overlap between cash income tax payments and current federal tax expense will likely be greater– although “current tax” will still be the clear apples-to-apples choice for evaluating federal taxes paid on current-year U.S. income and the worldwide cash tax figure CVS would like us to focus on will remain doubly irrelevant. For tax year 2025 in particular, cash income tax expense is pretty worthless as an indicator of how the U.S. tax system applied to a company’s income in that year. It’s understandable that CVS would like Americans to look at a number that’s bigger than zero, but that doesn’t make it the right number.
The Washington Post’s editorial board took a different tack in its (indirect) critique of our analysis: rather than taking the topic-changing strategy favored by CVS, the board instead went with the “perfectly legal” canard. The Post’s Tax Day editorial argues that the companies beating the federal tax system like a pinata last year are “just using the tools Congress gave them.”
There is some truth to this, as our report is careful to note: many of these companies’ tax savings are clearly attributable to tax breaks Congress has enacted or expanded in recent years at the behest of the Trump administration, especially bonus depreciation and the immediate expensing of research spending. As we have argued elsewhere, these provisions routinely fail to deliver the social benefits their proponents have promised: even if they’re legal now, some of these provisions probably shouldn’t be. Even so, the Post’s critique missed the mark, for two reasons.
First, these companies admit (again, because FASB requires them to) that they are claiming tax breaks they believe are illegal. The 88 companies profiled in our analysis collectively acknowledge that they claimed an astonishing $3.5 billion of “uncertain tax benefits,” tax breaks that the companies claimed on their 2025 tax returns but believe are more likely than not to be disallowed on audit—if an audit ever comes. These companies are demonstrably living in the grey areas of the tax law—much like the company founded by the Post’s owner, Jeff Bezos.
Second, the billions of dollars that were spent on lobbying Congress last year weren’t just buying flowers. Every year, corporate money flows like a mighty river through the halls of Congress in an effort to reshape the law—especially the tax law—to the advantage of these companies. The tax laws Congress enacts are, in large part, the laws business lobbies pay them to enact. The corporate tax cuts pushed through by a Republican Congress and President Trump in 2017 and 2025 were, in large part, exactly the policy changes big multinational corporations had been hawking for years.
In this moment, when the Trump administration is hobbling regulatory agencies as fast as it can, it feels like a minor miracle that the most profitable corporations in America are still legally required to tell their shareholders—and the American public—how much federal (and state) income tax they pay each year on their U.S. income. It’s a perennially useful barometer of the health of our corporate tax that has, on occasion, prompted lawmakers to make this important revenue source fairer and more sustainable. No wonder, then, that these companies want our leaders in Congress to think about something else.
