donald trump has become the country<u+2019>s most notorious tax shirker. and while his long avoidance of federal income taxes is extreme, it<u+2019>s also part of a larger problem. the most affluent and powerful parts of our society have too easy a time legally avoiding taxes. consider corporate taxes, which ultimately tend to be paid by the well-off, because they own the most stock. the official corporate rate is 35 percent, infamously higher than in any other advanced economy. yet there are so many loopholes that companies often pay relatively little in tax. many companies work hard to shroud how much they really pay, sprinkling various figures throughout their complex financial statements. but companies must report one number that provides a good glimpse. it<u+2019>s called cash taxes paid <u+2014> the combined amount that a company pays in federal, state, local and even foreign taxes. i asked the analysts at s&p global market intelligence to calculate this number since 2007 for this country<u+2019>s 500 largest public companies, and the results reveal a broken tax system. fixing it should be an early priority for the next president. if hillary clinton wins, it may well be. a good case study is amazon, which pays a rate much lower than its more traditional retail competitors. between 2007 and last year, the company paid only 13 percent of its profits in taxes. remember: that<u+2019>s not just federal taxes. it<u+2019>s federal, state, local and foreign taxes. how does amazon get away with this? a tangle of tax breaks and loopholes, some enacted in the name of creating jobs despite meager evidence that they do. for many companies, the key move is opening offices in a low-tax country like ireland and then claiming that much of their business flows through those offices. put all these tax breaks together, and you end up with our system. at&t and general electric each paid a combined tax rate of only 18 percent since 2007, according to the s&p data. coca-cola, apple and ibm paid 17 percent, and alphabet (google<u+2019>s parent) is at 16 percent. boeing is at 8 percent, facebook at 4 percent. and the following tax rate will sound familiar to anyone who has been watching the presidential campaign: pg&e, the california-based utility company, has paid zero net taxes since 2007. in fact, it has paid negative taxes, receiving tax breaks more valuable than its tax payments. <u+201c>the tax code, on the business side and the personal side, is a rotting economic carcass,<u+201d> senator ron wyden, the oregon democrat, told me. <u+201c>all these games are significantly eroding the american tax base.<u+201d> the inequities contribute to the great american stagnation that i described in last week<u+2019>s column . the billions of dollars in taxes being avoided by g.e., coca-cola and others is money that can<u+2019>t be used to lift living standards for ordinary families: it can<u+2019>t be used to reduce their taxes and can<u+2019>t pay for schools, medical research or clean energy. there is another victim, too <u+2014> one easily forgotten in this populist time. many large companies do indeed pay a lot of taxes. for one reason or another, these companies can<u+2019>t take advantage of loopholes and must pay a rate much closer to the official one. brick-and-mortar retailers, for example, aren<u+2019>t as politically popular as manufacturers or technology companies and haven<u+2019>t persuaded congress to create a lot of special tax breaks. retailers also can<u+2019>t easily pretend their business is based overseas. as a result, cvs, home depot, walmart and target have all been paying a combined tax rate of more than 30 percent, more than twice as high as amazon<u+2019>s rate. this system is cumbersome <u+2014> causing companies to devote great effort to tax avoidance <u+2014> and unfair. a better system could lift economic growth, by directing more of investors<u+2019> money to truly promising companies, rather than tax-advantaged ones. fortunately, there are signs of hope. overhauling the corporate tax code is a rare issue on which the two parties have some common ground . if the democrats take the senate, wyden is in line to lead the finance committee and says its first priority will be a big bill to improve roads, bridges and public transit systems (and create jobs). the second will be a corporate-tax bill to pay for the infrastructure. both are good ideas. as strong as the case for change is, corporate-tax reform will still cause a nasty political fight. companies make millions of dollars from tax avoidance. to defend the status quo, some will devise clever arguments to suggest that a new system would somehow destroy jobs or otherwise wreak havoc. they will pretend they<u+2019>re just looking out for the rest of us. don<u+2019>t be fooled. you can find me on twitter (@dleonhardt) and facebook . i am also writing a daily email newsletter until the election and invite you to subscribe . follow the new york times opinion section on facebook and twitter (@nytopinion), and sign up for the opinion today newsletter . a version of this op-ed appears in print on october 18, 2016, on page a23 of the new york edition with the headline: companies avoiding taxes. today's paper | subscribe
the big companies that avoid taxes
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