Nike, FedEx, and 24 other companies with $77 billion of combined income have avoided paying taxes for years, a new report found

Nike Beijing
Customers lined up outside the Nike flagship store on the opening day at Wangfujing Street on January 20, 2021 in Beijing, China.

  • 55 publicly traded companies paid $0 in federal taxes last year, a study by ITEP found.
  • Nike and FedEx are among 26 companies that have not paid federal taxes in three years.
  • In 2020, the 55 companies avoided paying about $12 billion in federal taxes.
  • See more stories on Insider’s business page.

55 of America’s biggest companies paid $0 in federal taxes last year, a new study from the Institute on Taxation and Economic Policy (ITEP) found.

The 55 publicly traded companies would have paid an estimated $12 billion in federal taxes if not for corporate tax breaks in 2020, including $8.5 billion in tax avoidance and $3.5 billion in tax rebates, the report found using regulatory filings and other information.

Nearly half of the companies have avoided paying federal taxes for the last three years, according to the report. Nike, FedEx, and DTE Energy were among 26 companies that recorded $77 billion in combined pre-tax income in the past three years, but did not pay any federal income taxes.

The news comes at the same time President Joe Biden looks to raise taxes on corporations. The White House announced this week that it plans to limit the number of companies that do not pay federal taxes, as well as increase the corporate tax rate to 28% – raising an estimated $2 trillion over the course of 15 years.

How do multi-billion dollar companies avoid federal taxes?

ITEP’s data found some of the nation’s biggest companies have been avoiding federal taxes for decades, dating back to the Reagan administration. The companies, which encompass a wide variety of industries, use a range of tactics, including tax exemptions and deductions.

While company tax returns are private, publicly traded companies must file financial reports that include information on federal income taxes. Using the financial reports as well as data on each companies’ pre-tax income, ITEP was able to analyze some of the major resources the companies used to avoid paying federal taxes.

In 2017, the Trump administration’s Tax Cuts and Jobs Act of 2017 amended the Internal Revenue Code of 1986, the Washington-based research group said the act failed to address major loopholes in the tax code.

“When President Trump signaled his intention to cut corporate taxes in 2017, he and Congress had an opportunity to pare back the many loopholes that have allowed companies to avoid tax on much of their income since the 1980s,” the report said. “Now, with three years of data published on the effective tax rates paid by publicly traded companies, it is clear that the Trump law has not meaningfully curtailed corporate tax avoidance and may even be encouraging it.”

Read more: When businesses should file taxes this year and how to get an extension if you need more time

The 2017 tax bill dropped the top corporate income tax rate from 35% to 21% – a corporate tax rate that is below average for most countries represented in the Organisation for Economic Co-operation and Development, a group that represents 37 developed countries. The act also allows companies to immediately write off the cost of new equipment and machinery.

Some of the loopholes ITEP found many companies used include tax breaks for executive stock options which allowed the companies to write off stock-option expenses.

Multiple companies, including Nike and Hewlett Packard, used federal research and experimentation tax credits to reduce their incomes, while companies like DTE Energy and Duke Energy used tax breaks for renewable energy to avoid paying federal taxes.

The CARES Act made it even easier for companies to avoid taxes

The $2.2 trillion CARES Act which was passed last year to help alleviate the economic distress of the pandemic and help businesses survive, provided the 55 companies with over $500 million in tax breaks, according to ITEP.

Dozens of publicly traded companies used provision from the CARES Act that temporarily allowed businesses to use losses in 2020 to offset profits earned in previous years, according to the research group.

FedEx was one of the companies that used the CARES Act to reduce tax bills from prior years when the tax rate was higher.

The company told Insider the CARES Act “helped companies like FedEx navigate a rapidly changing economy and marketplace while continuing to invest in capital, hire team members, and fund employee pension plans.”

Nike, HP, Salesforce, Duke Energy, and DTE Energy did not respond to a request from Insider for a comment.

In its report, the left-leaning research group pointed to several tax code amendments that could cut down on the number of companies that do not pay federal taxes, including a “minimum tax” for profitable companies, as well as cutting back on tax breaks for public companies.

Biden has repeatedly expressed interest in increasing taxes for major corporations as a way to fund his $2 trillion infrastructure plan.

On Wednesday, Biden called out Amazon for avoiding federal taxes. After paying $0 in federal taxes for two years, Amazon started paying federal income taxes in 2019.

Biden said he was aware the company was one of many Fortune 500 companies that use loopholes to avoid taxes, while middle class families are not afforded the same opportunities and pay over 20% tax rates.

“I don’t want to punish them, but that’s just wrong,” Biden said.

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Google’s new Chromebook update shows that laptops of the future are going to look more like our smartphones

Google Pixelbook
Google’s Pixelbook Go

  • Google is launching a new feature for connecting your Android phone to your Chromebook laptop.
  • It’s another sign that laptops are becoming even more closely tied to our phones.
  • Apple, Lenovo, and other companies are also bringing more phone-like features to new notebooks.
  • See more stories on Insider’s business page.

It’s no secret that smartphones have assumed some of the duties of our laptops over the past decade. And in turn, laptops have increasingly evolved to become more like the devices we carry in our pockets.

While laptops have had smartphone-like features such as touchscreens and cellular connectivity for years, 2021 feels like another big step in that direction, both in terms of software and hardware. The latest evidence came this week on March 9, when Google announced a slew of new features for the software that powers Chromebook laptops.

One of the biggest new additions is a feature called Phone Hub, which as its name suggests makes it easier to keep track of your Android phone directly from your laptop. You can locate your phone, view and respond to text messages, and check your Android device’s battery life, all on your Chromebook.

It’s far from being the first tool designed to help you manage your phone through your laptop. Microsoft offers an app for connecting Android phones to Windows 10 PCs, and Apple’s macOS platform has long offered interoperable features designed to work nicely with the iPhone, such as Handoff.

But the fact that phone-centric features like this new hub are the centerpiece of Google’s latest Chrome update says a lot about how major tech firms are thinking about the direction in which laptops are headed. This, along with other recent industry developments, indicates that the future of the laptop is all about making notebooks either behave more like our smartphones or get better at connecting us to our phones.

Take the new laptops announced at the annual CES tech show in January, for example. Support for 5G connectivity was seemingly in nearly every laptop, including new models from Lenovo and HP among others.

Laptops with cellular support have been around for nearly 10 years, but it hasn’t really been a major selling point since Wi-Fi networks are so prevalent and it’s easy to just use your phone as a hotspot. But in 2021, laptop makers are clearly preparing for a future in which that might change, especially now that many people may be working outside of a traditional office setting permanently.

Apple’s M1-powered MacBook Air and MacBook Pro also show how laptops are evolving to become more like our smartphones. Apple’s new chip is based on the same basic architecture as the processors inside the iPhone, resulting in longer battery life, faster responsiveness, and iPhone app compatibility.

In other words, it’s making the Mac feel a lot more like your iPhone. Apple’s latest software update for Mac devices also introduces a new interface that more closely resembles the iPhone’s operating system.

It’s not just Apple. PC makers have been launching laptops powered by chips based on the same basic architecture as the processors inside mobile devices for years. We saw more of these laptops at CES too, including the HP Elite Folio and Lenovo IdeaPad 5G, both of which run on the Snapdragon 8cx processor from Qualcomm, the company that creates the chips inside just about every major smartphone.

Qualcomm’s goal with this chip is to bring all-day battery life, portability, and support for high resolution cameras to laptops. If that sounds familiar, it’s because your smartphone already does these things much better than your laptop can.

Many of these products and developments were in place long before the pandemic started. But COVID-19 has only highlighted the ways in which laptops fall short in comparison to smartphones, perhaps accelerating a shift that was already inevitable.

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Why printer ink is so expensive

  • Printer ink can often be more expensive than the printer itself.
  • Using an outdated “razor-and-blades” business model, printer companies sell printers at a loss and make up for it in ink sales.
  • Printer companies do whatever they can to squash competition from more economical and sustainable third party options by frequently updating the firmware in the cartridges.
  • Visit Business Insider’s homepage for more stories. 

Following is a transcript of the video.

Narrator: A gallon of printer ink can cost you $12,000. When in cartridge form, it’s more expensive than vintage Champagne and even human blood. In fact, it can be cheaper to buy an entire printer than it is to purchase new ink cartridges. So why is printer ink so expensive?

Let’s start with the first printers. No, not that far. No. Come on. There we go. Inkjet printers were first developed in the 1960s, and early computer inks were made from food dye and water. Because of this, they would fade after a few months, so companies had to develop a dye that gave permanent photographic quality. In 1988, Hewlett-Packard achieved just that, with the first mass-market inkjet printer, which sold for about $1,000. But a lot has changed since then.

Today, you can buy a brand-new printer for around $35. But there’s a catch. When the ink runs out in one of these printers, you need to buy specific cartridges, and these cartridges are expensive. So why are the cartridges so pricey?

David Connett: Oh that’s simple: greed. And an outdated razor-and-blades model.

Narrator:  This is David Connett. He’s the former editor of The Recycler and has been lobbying for change in the printer-ink industry for years.

Connett: They sell the printers cheap. They sell the consumables at a very expensive price. And basically it’s a formula: The cheaper the printer, the more expensive the consumables.

Narrator:  Once you’ve bought a printer that uses cartridges you’re trapped in a cycle. You have no choice but to buy them, or throw away your printer. As a printer is typically a one-time purchase, companies don’t mind selling them at a loss and making the money back through cartridge sales. The HP Envy 4520 all-in-one printer, for example, sells for $70 but is estimated to cost $120 to manufacture. The loss they make on printers means that companies need to sell ink cartridges to make a profit, and this model has led to a battleground between printer manufacturers and third-party ink suppliers. The companies do everything they can to keep you buying official ink cartridges. Manufacturers install microchips into their cartridges and frequently issue firmware updates to prevent the use of third-party ink, which can be more affordable.

Connett: Last year, almost 900 firmware upgrades were issued by just nine printer manufacturers, so that’s almost three a day. I mean, that’s just, like, either absolute incompetence, ’cause you’ve got to do it so much, or it is a definite stealth tactic to control the market.

Narrator: Printer companies attribute the high costs to the research and development that goes into perfecting printer ink. The materials they use, however, cost very little.

Connett: The manufacturing cost of ink is between €20 and €40 a liter.

Narrator: And a lot of the ink you buy never even gets used for printing. According to a 2018 test by Consumer Reports, more than half the ink you buy could end up lost in maintenance cycles for cleaning the printheads. And printers that use multiple-color ink cartridges also stop working as soon as one color runs out, even if the other colors are still full. These days, you’re getting even less for your money. While the cartridges themselves are the same size and price, they often contain far less ink inside than they used to. The ink in many manufacturers’ cartridges has shrunk from 20 mil to around 5 mil over the past few years, without any reduction in price. The original-size 20 mil cartridges are often still on sale but are often sold as extra-large cartridges for even more money. And some new cartridges can have as little as 3 milliliters of ink inside. Some companies have now even started ink subscriptions, deactivating your cartridges remotely if you print more than your allocated pages. Laser printers offer a lower-cost alternative to inkjet but produce a lower-quality printed image. The real solution for many, though, would be to offer more-efficient ink cartridges.

Connett: This product, you know, can be better engineered. They could liaise with the aftermarket to actually, you know, find a solution that works for everybody because, you know, this, ultimately, this is bad for the consumer, because it’s overpriced and expensive, and it’s bad for the environment, because it doesn’t need to be made that way.

Narrator: We reached out to Canon and HP for comment. HP replied with this statement:

“Original HP ink and toner cartridges deliver the best possible printing experience for customers. We make significant investments in R&D each year to provide the highest levels of print quality, safety and environmental sustainability. When customers purchase HP, they are reducing plastic waste and contributing to a circular economy. And we work tirelessly to maximize value for our customers, including Instant Ink, our “ink delivery” subscription service which includes ink, shipping and recycling.”

EDITOR’S NOTE: This video was originally published on August 19, 2019. 

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