Here is an interesting article about yet another major corporation not paying federal taxes! In this case, it is the video-conference company Zoom. The company made a record $672 million profit in the recently ended fiscal year, but it expects to pay no federal tax due to a previously reported tax credit.
How can this be?
Well, it is simply following U.S. tax law as written. By the way, the $672 million profit was more than 3,000% higher that the $21 million profit reported in the previous fiscal year. Corporations can legally use reported losses to shelter future income, much like that of an individual taxpayer.
This all makes good sense, right? Perhaps so and perhaps not- here’s why…
Most individual taxpayers don’t have big losses to offset years for when taxes are owed, as corporations may have. Nevertheless, it is beyond irritating when a corporation has no tax liability, while the individual makes yearly tax payments to Uncle Sam. The press is all too eager to report this information, as they know good ratings will follow as folks get riled up over this news!
Many investors and taxpayers reasonably feel that companies should pay taxes- and they do, to a degree. According to the Office of Management and Budget, the corporate share of federal government receipts was 26.5% in 1950 and estimated to be 7.1% in 2020; the share of individual income taxes went from 39.9% to 48.9% during the same period.
Perhaps a better plan would be to institute a minimum corporate tax, while allowing losses to be carried forward for a few more years. A minimum corporate tax would ensure that Corporate America always pays some taxes, and still be able to carry losses over time. It should also prove to smooth out government corporate sector tax receipts. This may actually be a win-win… just a thought.
~ Brian Kasal- The Leadership Matrix
An added bonus– historical table from the Office of Management and Budget showing percentage of tax receipts by source: Table 2.2—Percentage Composition of Receipts by Source: 1934–2025 (this will open an Excel file)
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