Companies that do not pay income taxes

Every year we see new headlines on large, seemingly profitable companies that pay no income tax.

But as outrageous as the headlines may sound, the truth is almost always far more complicated and far less shocking.

As individuals, we don’t pay taxes on every dollar we earn.

Tax laws allow us to reduce our taxable income through standard deductions and even benefits for investing in our retirement, while tax credits further reduce the taxes we owe.

Likewise, Congress grants businesses legitimate deductions from their taxable income, as well as credits against the taxes they owe.

This includes credits to invest in research and development and deductions to depreciate physical investments such as machinery or factories.

When businesses experience losses or erratic business cycles, Congress also allows them to offset their taxable income, to ensure they are taxed on average profitability.

These policies are important because they help protect jobs and job creation, and they encourage progress that improves our lives and helps the economy.

We would live in a very different world without these policies – a world with fewer medical breakthroughs, fewer life-changing technologies, fewer amenities, and less investment in clean energy.

These deductions and credits allow businesses to make investments in the future that we all benefit from.

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