Taxes. Individuals and corporations must pay them but it’s always a game of trying to pay the least amount. At least 55 of the largest corporations in America paid no federal corporate income taxes on their 2020 profits, according to the Institute on Taxation and Economic Policy. Some of these companies include big names like FedEx, Nike, HP and Salesforce. Those 55 corporations would have paid a collective total of $8.5 billion. Instead, they received $3.5 billion in tax rebates, collectively draining $12 billion from the U.S. government. These estimates don’t include corporations that paid only some but not all of these taxes, like Netflix and Amazon. The more money you make, the more you have to pay in taxes, right? Not always. The ultra-wealthy typically take advantage of rules in the tax code which enable them to lower their effective tax rate. Warren Buffet has often pointed out that he pays less taxes than his secretary and Amazon famously paid zero taxes in 2018. So how exactly are the country’s biggest earners using the tax code to avoid paying taxes? And on a state level, to balance their budgets during the coronavirus pandemic, states including New Jersey and New York have raised taxes on the wealthy. Conservatives warn that it will cause many of those who left in the early days of the pandemic to make those moves permanent since they’re no longer bound to the physical locations of their offices as many businesses adopt remote or hybrid work. But available data from 2020 show that the so-called exodus wasn’t as pronounced as initially projected, and the urban exit that did happen, was to suburbs rather than low tax states. CNBC explores how the most profitable companies in the country maneuver the complicated tax system to avoid federal corporate income taxes, how wealth individuals use the tax code to lower their taxes and if tax flight is a myth.
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