The statutory corporate income tax rate in the United States is 21 percent. Last year, 706 of the country's largest corporations paid an effective federal rate of 10.4 percent — less than half. According to a study published Thursday by the Institute on Taxation and Economic Policy, that 10.4 percent figure is the lowest effective corporate tax rate ITEP has documented in more than 40 years of analyzing corporate income taxes. The 706 companies examined reported a combined $1.88 trillion in U.S. profits.
Those are the numbers. Here is what the numbers mean: $461 billion in taxes owed at the statutory rate was not paid. Some of it was legally deferred. Some of it was legally eliminated. All of it was the direct result of policy choices made by identifiable people with identifiable financial interests in the outcome.
The ITEP report traces the collapse of corporate tax obligations to two legislative events. The first was the 2017 Tax Cuts and Jobs Act, which cut the statutory corporate rate from 35 percent to 21 percent — generating $263 billion in annual savings for the companies studied. The second was the One Big Beautiful Bill Act, passed by the Republican-controlled Congress and signed into law last year, which expanded and made permanent the 2017 cuts. Together, the two laws didn't just reduce what corporations owe. They restructured the relationship between corporate profit and public obligation — and they did so while Congress was simultaneously arguing that the country could not afford to fund food assistance, housing, or Medicaid at existing levels.
"These findings show just how dramatically the corporate tax system has been tilted in favor of the nation's wealthiest and most powerful companies," ITEP senior fellow Matt Gardner, who co-authored the report, said in a statement. "At a time when lawmakers claim the country cannot afford investments in families and communities, some of the most profitable corporations in American history are paying little or nothing in federal income taxes. This is not an accident. It is the predictable outcome of deliberate policy choices that have steadily eroded the corporate tax base."
Gardner's framing is precise. The word "accident" is doing real work. Corporate tax avoidance at this scale is not a loophole that slipped through — it is the architecture. The 2017 law was lobbied for by the same companies that benefited from it. The 2025 extension was lobbied for by the same companies that benefited from that. The mechanism is not hidden: corporations spend money on political influence, political influence produces tax legislation, tax legislation reduces what corporations pay, and the savings finance more political influence. This is not a cycle that closes itself.
The beneficiaries are specific. Among the 114 corporations that paid zero federal income tax in 2025, the ITEP study names Tesla, Walt Disney, CVS, Citigroup, United Airlines, and DoorDash. These are not marginal businesses struggling to survive. They are among the most recognizable brands in the American economy. Tesla reported substantial U.S. profits. Disney operates a near-monopoly on family entertainment. CVS is one of the country's largest pharmacy chains, positioned to benefit from every expansion of the healthcare market. Each paid the federal government nothing.
The concentration of tax savings at the top is even more striking. Of the $198 billion in total federal tax subsidies received by the 706 companies — meaning the gap between what they paid and what the statutory rate required — just 25 corporations accounted for more than half. Alphabet received $18.9 billion in subsidies. Microsoft received $18.7 billion. Amazon received $17.4 billion. Meta received $13.9 billion. These four companies alone — four of the most profitable corporations in human history — received more in federal tax subsidies than the entire discretionary budget of many federal agencies. This is worth sitting with: the same companies that have positioned themselves as partners in shaping government AI policy are simultaneously among the largest beneficiaries of a tax system their lobbying helped construct.
The 2017 Tax Cuts and Jobs Act cut the statutory corporate rate from 35% to 21%, generating an estimated $263 billion in annual savings for the 706 companies studied. The One Big Beautiful Bill Act, passed in 2025, expanded and made permanent those cuts. ITEP attributes the 10.4% effective rate — the lowest in 40+ years of its analysis — to the combined effect of both laws.
A separate tier of the data tells a different story about the distribution of the problem. Of the 706 companies studied, 258 paid effective tax rates below 7 percent — less than one-third of the statutory rate. Those 258 companies reported $683 billion in U.S. profits. Their collective effective rate was 1.7 percent. At that level, the relationship between profit and tax obligation has not been reduced. It has been severed.
The standard defense of low corporate tax rates is that they stimulate investment, create jobs, and ultimately generate economic activity that benefits workers. This argument has been made consistently since the 2017 law passed. The evidence since 2017 is available and has been studied. What followed the rate cut was not primarily a surge in capital investment or worker wages. What followed was a surge in stock buybacks — corporations purchasing their own shares to boost stock prices and enrich shareholders. The pattern of corporations using tax savings to fund buybacks rather than wages has been documented repeatedly. The ITEP findings do not exist in isolation. They are the tax side of a broader redistribution that has been ongoing for nearly a decade.
There is also a budget arithmetic that rarely gets stated plainly. The federal government funds its operations through tax revenue. When that revenue declines — through rate cuts, credits, deferrals, and subsidies — the government faces a choice: borrow more, cut spending, or raise taxes elsewhere. The past decade has featured all three, but the spending cuts have fallen disproportionately on programs that serve people who do not have corporate tax attorneys. The One Big Beautiful Bill Act, which made the corporate cuts permanent, was passed alongside reductions to Medicaid, food assistance, and housing programs. The connection is not rhetorical. It is fiscal. The $198 billion in corporate tax subsidies documented by ITEP in a single year has to come from somewhere. It comes from reduced services, increased deficits, or higher effective tax rates on people who cannot afford to lobby for lower ones.
Outside the United States, the consequences of American corporate tax policy are not abstract. When U.S. multinationals pay effective rates of 1.7 percent on hundreds of billions in domestic profits, they are also setting competitive terms for tax policy globally. Countries that want to attract American corporate investment face pressure to offer comparable or lower rates. The result is a decades-long race to the bottom in corporate taxation that has reduced public revenue in countries far less able to absorb the loss than the United States. The ITEP study covers domestic U.S. taxes only — but the companies it studies operate in every major economy on earth, and the tax strategies they employ are not limited to American soil.
The political economy of this situation has a specific shape. The corporations that benefit most from low tax rates are also among the largest spenders in federal elections. As Tinsel News has reported, 205 corporations gave $210 million to elect the administration that later dropped enforcement actions against them. The investment logic applies equally to tax legislation: corporations spend on campaigns and lobbying, campaigns produce legislators, legislators produce tax law, tax law produces savings that exceed the investment many times over. This is not corruption in the criminal sense. It is the legal architecture of American political finance producing its intended result.
Gardner's conclusion — that this outcome is "not an accident" — is the most important sentence in the ITEP report, and it points toward the only honest way to understand what the study documents. The 10.4 percent effective rate is not a market outcome. It is a policy outcome. It was chosen. The people who chose it received substantial financial support from the people who benefited from it. The people who bear the cost — through reduced public services, higher deficits, and a tax burden that falls more heavily on wages than on capital — did not have equivalent representation in the rooms where the choices were made.
The midterm elections arrive in this context. Legislators who voted for the One Big Beautiful Bill Act — including those who simultaneously voted to cut food assistance for millions of Americans — will ask for reelection from constituents who pay a higher effective federal tax rate than Citigroup. That gap between what corporations pay and what working people pay is now a documented, sourced, specific number: at least 10.4 percent versus the rates most wage earners face. The question for the next Congress is whether the tax base gets rebuilt, and who has the power to stop it from happening. The answer to the second question is already in the ITEP data.
