Monday, December 23, 2019

In the wake of ITEP’s report

Per Newsweek and relying on ITEP’s report about corporate income taxes, Bernie Sanders took the opportunity to tweet:

Amazon   CenturyLink   Chevron   Deere   Delta Air Lines   Eli Lilly
FedEx   Gannett   General Motors   Goodyear   Honeywell   JetBlue
MGM Resorts   Netflix   Prudential Financial   Starbucks   Whirlpool

Total federal income tax paid by these companies last year: $0    [End]

Sanders carelessly trusted ITEP’s flawed report:
- He used “paid”, like ITEP often does, despite the fact that taxes shown in ITEP’s report are GAAP accounting provisions.
- The income tax provision of nine of the 17 companies Sanders names flips from negative to positive when the deferred part of income tax expense is included. ITEP excluded it.
- ITEP showed a tax for Starbucks of -$74.8 million. I don’t know where they got this number. Starbucks’ 10-K accessible here doesn’t show it. The 10-K shows positive U.S. federal income tax provisions – both “current” and “current + deferred” – for fiscal years ended 9/30/2018 and 9/30/2019.

The Cato Institute had this to say about ITEP’s report. Included: “The study relies on taxes reported on financial statements, but those are often quite different than actual IRS payments, which are private and undisclosed.”

Yahoo Finance had a story on December 4: Biden Unveils $3.2 Trillion Tax Plan Targeting Corporations Like Amazon. The date is before ITEP’s December 16 report, but ITEP published earlier articles about 2018 corporate income taxes of Amazon, Netflix, and many other companies. The main part of his plan is a minimum tax rate of 15% of net income before tax. For individual taxpayers, it would stop the “stepped-up basis” at death for taxing capital gains.

Update 1/12/2020: The Dallas Morning News here reported -- relying on ITEP's faulty report -- that American Airlines paid no U.S. federal income taxes for 2018. In fact, American Airlines' income tax provision was $424 million, $390 of it U.S. federal. ITEP ignored the $390 million because it was "deferred." It actually is only deferred from previous years and recognized in the current year.

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