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As Tax Day approaches, Oxfam finds top 70 US companies will save at least $313 billion in their tax bill
Some of the largest corporations in America, companies like Apple, Archer Daniels Midland, Exxon, JP Morgan, Nike, Pfizer, and Walgreen’s, have garnered attention for speaking out against President Trump’s policies and rhetoric in the first year of his administration, but primarily flexed their muscle in Washington advocating for lower taxes, according to a new Oxfam analysis of the public advocacy and lobbying disclosures of the largest 70 American corporations across seven sectors.
“Today’s CEOs have more appetite to align their company’s public image with specific sides in some of the country’s most contested and polarized debates. On issues ranging from gay marriage to refugee rights, executives across industries have been pushed – or willingly walked – into the eye of the political storm,” said Irit Tamir, Director for the Private Sector Department at Oxfam America. “But when we look at what they are lobbying on behind closed doors, they really, really, really want to pay less in taxes while other issues take a back seat. Words matter, but actions - and lobbying dollars - still speak louder.”
The Oxfam analysis released today compares the public rhetoric of the 70 companies on tax, climate change, diversity and inclusion to that of their reported lobbying activities. Many of the companies issued support for addressing climate change, support for refugees, immigrants, and DACA recipients, and support for greater diversity and inclusion. Some companies publically admonished President Trump’s administration for its positions, such as pulling out of the Paris climate agreement, the President’s xenophobic comments and equivocation of white supremacists and protesters at Charlottesville, and the discriminatory Muslim ban. Yet, most companies spent little or no money to lobby in support of advancing these agenda items to Congress. Instead, they spent millions of dollars to push for lower taxes.
Oxfam’s analysis found that the 70 companies on our list collectively spent more than $280 million to lobby Congress on more than 3,000 issues in 2017. They reported lobbying on climate change 19 times; 138 times on diversity and inclusion and 552 times on tax. That translates into an estimated $1.5 million spent lobbying on climate, almost $11 million on diversity and inclusion issues, and almost $44 million to lobby on tax.
“The US pulled out of the Paris agreement, the Muslim Travel Ban still reigns, immigration reform and DACA have not moved in Congress, yet a tax cut that benefits the rich and corporate America passed and was signed into law by President Trump,” continued Tamir. “The US business community lobbied hard to change how companies with overseas operations are taxed, and this lobbying paid off enormously. We estimate that their return on investment for tax lobbying includes lowering their tax bill by $313 billion on offshore earnings alone, with additional tax savings on earnings claimed in the US.”
Before passage of the new tax law in December, US companies operating abroad were required to pay the corporate income tax on all earnings regardless of where the earnings were made. The new tax law switches the US from a worldwide to a quasi-territorial system for corporations, which in effect limits US taxation to income earned within US borders, and , amongst other things, delivers a massive one-time tax cut for the profits US companies had overseas.
The trend of corporations lowering their contributions to public finances fuels the scourge of poverty and inequality in the US and abroad. When governments capitulate to companies on tax, social spending on programs that help level the playing field between rich and poor are often sacrificed. At the same time, governments attempt to make up revenue shortfalls through regressive taxes that hit the most vulnerable hardest.
“Companies possess immense power and influence and it’s encouraging to see them using their corporate voice on the social and economic issues of the day,” continued Tamir. “The private sector can influence our society for good – including supporting policies that reduce poverty and increase human dignity around the world – or toward less benevolent ends that will have detrimental impacts on all of us. Here’s hoping they will use their money and influence for the good.”
Oxfam list of 70 companies comprises the top 10 companies across 7 sectors according to Forbes’ America’s Top Public Companies list: https://www.forbes.com/top-public-companies/list.
The companies are as follows:
APPAREL: Burlington Stores, Foot Locker, Gap, Hanesbrands, L Brands, Nike, PVH, Ralph Lauren, Ross Stores, VF
BANKING & FINANCE: AIG, Bank of America, Berkshire Hathaway, Citigroup, JPMorgan Chase, MetLife, Morgan Stanley, Prudential, State Farm, Wells Fargo
EXTRACTIVES: Anadarko Petroleum, Chevron, ConocoPhillips, Exxon Mobil, Marathon Petroleum, Phillips 66, Valero Energy, Andeavor, Occidental Petroleum, EOG Resources
FOOD & BEVERAGE: Archer Daniels Midland, Cargill, Coca-Cola, General Mills, Kellogg, Mars, Incorporated, McDonald’s, Mondelez International, PepsiCo, Tyson Foods
PHARMA: Abbot Laboratories, AbbVie, Amgen, Biogen, Bristol-Myers Squibb, Eli Lilly, Gilead Sciences, Johnson & Johnson, Merck, Pfizer
RETAIL: Albertsons, Costco, Home Depot, Kroger, Lowe's, Publix, Target, Walgreens Boots Alliance, Walmart, Whole Foods
TECH: Alphabet, Amazon, Apple Inc, Cisco, Facebook, HP Inc., IBM, Intel, Microsoft, Oracle
On diversity and inclusion, Oxfam looked at publicly available value statements, public statements or actions on President Trump’s Muslim travel ban, immigration reform, LGBTQ issues, gender equality, and the violence in Charlottesville. On climate change, Oxfam examined public value statements, public statements supportive of addressing climate change and of the Paris Climate Agreement. On tax, Oxfam looked at public statements about tax issues.
To estimate the savings on repatriation, Oxfam used publicly available information reported in the companies’ annual filings with the SEC filed on or before February 8, 2018 (at that time not all fiscal year 2017 10-K reports were available). Oxfam used the amount reported as offshore earnings permanently reinvested in the business as an approximation to the accumulated post-1986 earnings and profits (which is a tax amount and therefore not publicly available). Oxfam also applied only the highest rate applicable to repatriated earnings of 15.5%. In addition, Oxfam only considered tax credits for those companies that reported an estimated US tax liability in their 10-K. Oxfam acknowledges that the calculation is an approximation given that the information needed to make a more accurate calculation is not available to the public. However, Oxfam believes that the estimate is only part of the total savings that the Tax Cuts and Jobs Act has likely brought to companies.