Nike is one of 55 United States-based giants that did not pay corporate income taxes in their most recent fiscal year — despite reporting sizable pre-tax profits, according to a new study from the Institute on Taxation and Economic Policy (ITEP).
The study, first covered in The New York Times, also cites FedEx, Salesforce and big names from across a variety of industries from energy to food. “This continues a decades-long trend of corporate tax avoidance by the biggest U.S. corporations, and it appears to be the product of long-standing tax breaks preserved or expanded by the 2017 Tax Cuts and Jobs Act (TCJA) as well as the CARES Act tax breaks enacted in the spring of 2020,” said a statement from the The Institute on Taxation and Economic Policy, a left-leaning organization.
Corporate tax breaks have long been a hot-button issue — and President Joe Biden wants to raise taxes on America’s biggest companies, a move he says will fuel economic growth and finance advancements in transportation, utilities and other key areas.
In Nike’s case, the study says the Beaverton, Ore. didn’t pay federal income tax on about $2.9 billion of pre-tax income last year — and received a rebate of $109 million. (Nike’s last fiscal year ended May 31, 2020. For the full year, its reported net income was $2.5 billion, while revenues fell 4% to $37.4 billion.)
Nike is among the companies that ITEP cites as using the federal research and experimentation (R&E) credit to reduce its income taxes in 2020 as well as a tax break for executive stock options.
ITEP also said its findings show that Nike paid no federal income tax on $4.1 billion of U.S. pretax income during the Trump era.
FN has reached out to Nike for comment.
More broadly, the report says the 55 companies netted $40.5 billion in U.S. pretax income in 2020, according to their annual financial reports. The statutory federal tax rate for corporate profits is 21 percent, and under that rate, the companies would have paid a total of $8.5 billion for the year, the ITEP asserts. (Instead, it said, they received $3.5 billion in tax rebates.)
The study is based on ITEP’s analysis of annual financial reports filed by the largest publicly traded U.S.-based corporations in their most recent fiscal year. Some companies with unusual fiscal years have not yet filed such reports. Some publicly traded corporations paid nothing on profits in their most recent fiscal year but are not included in the report because they are not part of the S&P 500 or Fortune 500.