The Zero Club

In fiscal year 2020, the Institute on Taxation and Economic Policy analyzed the tax filings of 55 of America's largest corporations. Every one of them reported a profit. Every one of them paid $0 in federal income taxes.

Combined, these 55 companies reported $40.5 billion in US pretax income. At the statutory 21% corporate rate — itself slashed from 35% by the 2017 Tax Cuts and Jobs Act — they would have owed $8.5 billion. Instead, they collected $3.5 billion in rebates, for a total of $12 billion in tax benefitson $40.5 billion in profits.

These are not struggling startups. They are household names — Nike, Salesforce, FedEx, Dish Network, Duke Energy, Charter Communications — operating at scale, distributing dividends, enriching shareholders, and paying zero in federal income taxes while their own employees paid income taxes on every paycheck.

Over the full three-year period following the 2017 tax law (2018–2020), ITEP found that 26 companies paid zero or negative federal income taxes on $77 billion in cumulative profits — collectively receiving $4.6 billion in rebates from the US Treasury.

The tax code was not designed to create this outcome — it was shaped by it. Each mechanism below was created, expanded, or preserved by lobbyists paid by the corporations that benefit from them. They are legal. They are intentional. They compound.

No single mechanism is the whole story. These stack. A profitable corporation uses accelerated depreciation to reduce taxable income, stock comp deductions to reduce it further, R&E credits to zero out what remains, and carryback provisions to get a rebate on taxes paid in previous years. The result: the profitable corporation pays less than the worker in its warehouse.

The following are drawn from ITEP's analysis of SEC filings. These are not allegations — they are numbers from the companies' own annual reports.

In 2020, the 55 zero-tax corporations collectively spent hundreds of millions of dollars on federal lobbying and political contributions — the exact mechanisms that preserve the tax code provisions they benefit from.

Amazon spent $18.2 million lobbying the federal government in 2020. FedEx spent $1.9 million. Charter Communications spent $8.4 million. Nike, Salesforce, Duke Energy, DTE, Dish Network each contributed additional millions.

This is not conspiracy — it is the documented, legal operation of American tax policy. The companies that benefit most from the tax code fund the campaigns of the legislators who write it. They fund the think tanks that provide the intellectual cover ("job creators," "double taxation," "global competitiveness"). They fund the revolving door that rotates corporate lawyers into Treasury and congressional staff roles. The outcome is stable.

When Amazon lobbied against a proposed digital services tax, it was spending the money it didn't pay in federal income taxes to prevent paying federal income taxes. When FedEx's CEO publicly endorsed the TCJA before it passed, the company was publicly lobbying for the provision that would let it write off its entire fleet in year one. The relationship is direct, documented, and legal.

The 2022 Inflation Reduction Act introduced a 15% Corporate Alternative Minimum Tax (CAMT) — a minimum tax on "book income" (the profits companies report to shareholders) for corporations with over $1 billion in average annual income. The intent was to close the gap between book profits and taxable income.

It was a step. It was also immediately subjected to carve-outs, phase-ins, and implementation complexity that narrowed its reach. The CAMT covers only ~150 corporations at the billion-dollar threshold. Accelerated depreciation deductions can still offset book income under CAMT calculations. And the minimum tax rate — 15% — is still less than half of what the statutory rate would imply.

The larger structural fix — eliminating specific loopholes, raising the corporate rate back to pre-TCJA levels, closing the stock-based compensation excess deduction, ending bonus depreciation as a permanent policy — has not happened. The same corporations that benefited from the TCJA spent tens of millions to protect the TCJA. They succeeded.

The CAMT generated initial revenue, but the more important story is that companies reporting billions in profit while paying $0 in federal income tax was a documented reality for years, was politically possible to address, and was not fully addressed. The tax code that permits it remains intact.

The standard defense is that these corporations follow the law. This is true. The problem is that they shaped the law. Every provision that allows them to pay $0 was written, expanded, or preserved with their lobbying money. Calling the outcome "legal" is not an exculpation — it is a description of the capture.

While 55 corporations collected $12 billion in tax benefits on $40.5 billion in profits in 2020, the federal government borrowed money to fund pandemic relief. The national debt grew. The corporations that benefited from stable infrastructure, educated workers, a functioning legal system, and the consumer spending of people receiving federal relief — paid nothing toward any of it.

This is not a question of accounting complexity. ITEP's methodology uses the same numbers the companies publish in their own annual reports. The companies report billions in profits to their shareholders; they report $0 in federal tax liability to the IRS. Both sets of books are accurate. The gap between them is the tax code.

The moral case is simple: a worker at a FedEx facility in 2020, earning $15 an hour, paid federal income tax on every dollar. FedEx, on $1.2 billion in US pretax profit, received a $230 million check from the US Treasury. This is the system. It functions exactly as designed.