![]() Rather, it represents the use of a standard feature of almost every tax code on Earth - net operating losses. Hence, AMD’s low tax rate is probably not indicative of nefarious tax avoidance. In other words, even though AMD is profitable today, it has had huge losses in the past, and our tax system rightly allows companies to offset current income with past losses. However, as AMD’s latest annual report makes clear, it has $5.5 billion in U.S. pre-tax financial accounting income of $1.7 billion from 2018 to 2020. First on their alphabetical list, Advanced Micro Devices paid no taxes on U.S. Although looking at effective tax rates is useful, considering only the extremes yields meaningless statistics - unless you look at what caused the very high, or, very low rates.įor example, the Institute on Taxation and Economic Policy recently reported that 39 profitable corporations paid no federal income tax since 2017. This means that calls for new tax rules because a few companies had extremely low tax rates for several years are simply not serious tax policy material. One-time items, nuances of the law and the effects of the tax reform itself can all lead to absurdly high percentages.īut here’s an important fact: An effective tax rate is not some simple measure of all we need to know about a company’s taxes - it’s a complex combination of millions, if not billions, of transactions, simultaneously filtered through the politically motivated tax code and financial accounting rules. Such rates are generally the simple result of following the tax law. These effective tax rates are real, but the corporations are not overly generous. We should move them to the top of the world’s most admired companies. Sensing our country’s deep budget problems, these companies dug deep and gave until it hurt. And the corporate generosity posterchild, Merck, had a rate of 303%. taxes.Ĭisco and Western Digital had effective tax rates of 67% and 236%, respectively. In other words, it expensed 174% of pre-tax domestic profit in U.S. But did you know that some companies generously share their profits with the government out of the goodness of their corporate hearts? Since 2017, when Congress lowered the statutory corporate tax rate to 21%, VF Corp., the maker of brands such as North Face and Vans, had a domestic effective tax rate of 174%. The news is often filled with bad stories - so how about a good one? We’ve already heard that there are big, profitable corporations that pay no tax.
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