Read the full report here.

Introduction

All but a handful of 280 large, profitable corporations spent more money making their wealthy shareholders richer through dividends and stock buybacks than they paid in federal income taxes in the five years after the enactment of the Trump-GOP tax law, according to a new analysis by Americans for Tax Fairness. And it wasn’t even close: altogether the stockholder payouts outstripped tax payments by 7-to-1, $4.4 trillion vs. $608 billion. This heavy bias towards shareholder payments for wealthy investors over tax payments for public services exacerbates economic inequality and promotes political instability, as increasingly frustrated American workers struggle to get by while wealthy stock investors surge ever further ahead. 

Public services are not all that suffer when disproportionate amounts of corporate earnings are directed to shareholders. Worker wages, long-term business investment and other responsibilities of corporate citizenship all suffer when profits go so heavily to the owners of corporate stock. 

Those shareholders are almost exclusively wealthy: the richest 10% of Americans own over 93% of all publicly traded corporate stock held by the nation’s households. The wealthiest 1% own over half. That means the disproportionate share of profits flowing to corporate shareholders is almost entirely winding up in the bank accounts of the rich. Furthermore, much of that money isn’t even staying in this country, because a big chunk of U.S. stock is held by foreign investors.

The companies in this study are members of the Fortune 500 list of American corporations with the highest revenue. Our study mostly relies on data recently reported by the Institute on Taxation and Economic Policy (ITEP) on the taxes paid between 2018-22 by American corporations that were profitable in every one of those years. (Unlike ITEP’s study, our report also includes corporations that were net profitable over the five-year span, even if they had losses in some years.) Those five years were the first under the Trump-GOP tax law, which cut the corporate tax rate by two-fifths and in other ways mostly benefited the rich.

The 280 companies in our study–which include corporate behemoths like Apple, Alphabet (Google), JPMorgan Chase and Microsoft–represent over half the Fortune 500 and two-thirds (66%) of all the revenue generated by the full list of companies. That implies the phenomenon of shareholder payouts far outweighing federal tax payments may be nearly universal among the nation’s largest corporations. (See Methodology for a description of how we chose the firms in our study.) 

Policymakers are starting to offer remedies for the extreme tilt of corporate expenditures towards private gain and away from public good. To curb stock buybacks, President Biden and congressional Democrats enacted a 1% tax on share repurchases as part of 2022’s Inflation Reduction Act. The president has since proposed raising the tax to 4%. He also advocates raising the corporate income tax by a third, from 21% to 28%, and reforming the taxation of capital gains. These reforms and others would help redirect a fairer share of corporate profits to our nation’s needs.

Key Findings 

• Among 280 of the largest American corporations—which together enjoyed $4.4 trillion of domestic profits between 2018 and 2022—272 (97 percent) spent more on stock buybacks and dividends over those five years than they paid in federal income taxes.
• Of the $4.4 trillion spent on shareholders, $2.7 trillion went to stock buybacks, 4.4 times more than was paid in income taxes over the same period, with 237 out of 280 corporations (85%) spending more on stock buybacks alone than they paid in taxes. The remaining $1.7 trillion went to dividends, 2.8 times more than was paid in income taxes over the same period, with 207 out of 280 corporations (74%) spending more on dividends alone than they paid in federal income taxes. 
• In fact, these multinational corporations spent more on stock buybacks and dividends combined than they reported in total domestic U.S. profits ($4.39 trillion for stock buybacks and dividends vs $4.36 trillion in profits). The deficit was made up through offshore profits, draws on reserves, and borrowing.
• Among the corporations examined, stock buybacks had very nearly doubled (up 98%) by the end of the five-year period compared to 2017, the year immediately before implementation of the Trump-GOP tax law. That law slashed the corporate tax rate by two-fifths, which set off a flurry of share repurchases. Dividends rose by 40% during the same period. Meanwhile, median wages at these 280 corporations grew by an average of only 14%.
• The shareholders benefitting from all this corporate largesse are as a rule already very wealthy. The highest-income 10% of Americans own over 90% of all publicly traded stock owned by U.S. individuals; the highest-income 1% owns over half. 
• Much of the money corporations pay to shareholders instead of paying in taxes is also not taxed–or is only taxed on a delayed basis–once it’s received by shareholders. Foreign investors, retirement funds and other tax-exempt or tax-advantaged entities own almost three-quarters of publicly traded American stock. Even though non-wealthy Americans are better represented as stockholders in retirement accounts than in the general marketplace, the total assets in 401k’s, IRAs, and other such accounts are disproportionately held by the high-income. 
• Taxation of the capital gains enjoyed by taxable shareholders is delayed and even eliminated by loopholes in the tax code. Shareholder payouts that are taxed are taxed at a discount. The top tax rate on qualified dividends and the long-term capital gains stock buybacks help create is 20%, little more than half the top tax rate on wages of 37%.
• If only a small portion of the $4.4 trillion in shareholder payouts had instead been paid in federal income taxes, tens of millions of Americans could have benefitted from lower-cost healthcare, childcare, education and housing–and other public services–that help working families who lack big stock portfolios get ahead in life.

The Awful Eight: Case Studies 

Alphabet (Fortune Rank #8)

5-year U.S. Profit: $205.2 billion
5-year Federal Income Tax: $34 billion (16.6%)
5-year Total Stock Buybacks & Dividends: $168.2 billion (5 times more than paid in taxes)
Buybacks: $168.2 billion (5 times more)
Dividends: $0

Tech titan Alphabet (Google) saw its effective average annual tax rate plunge from 28.2% during the last four years prior to enactment of the Trump-GOP tax law in 2018 to just 16.6% in the first five years under the new law. That’s an estimated tax cut of $23.9 billion. 

All those tax savings and more have been poured into an explosion of share repurchases. In the five years prior to the Trump tax law, Google already spent a hefty $10.3 billion on stock buybacks, but that pales in comparison to the $168.2 billion they spent on stock buybacks in the five years after the law was signed, an increase of 1,530%. 

To offer a sense of scale, had Google invested this money in its employees, it could have expanded the firm’s workforce by 120,200 employees—or 63%—over the past five years at the current median wage. Alternatively, it could have given each existing employee an annual pay increase of $176,800 in each of the five years of the study. 

Apple (Fortune Rank #4)

5-year U.S. Profit: $159 billion
5-year Federal Income Tax: $24.1 billion (15.2%)
5-year Total Stock Buybacks & Dividends: $458.5 billion (19 times more than paid in taxes)
Buybacks: $387.3 billion (16 times more)
Dividends: $71.2 billion (3 times more)

Consumer electronics giant Apple was recently sued by the federal government and 16 states for violating antitrust laws, using its monopoly power to raise costs on consumers. The U.S. Justice Department issued a statement that claimed in part: “Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others.”

Apple saw its effective average annual tax rate plunge from 43.5% during the last four years prior to enactment of the Trump-GOP tax law in 2018 to just 15.2% in the first five years under the new law. That’s an estimated tax cut of $45 billion. This was accompanied by a 134% increase in Apple’s stock buybacks, a jump of more than $220 billion in the five years following the Trump tax law compared to their prior five-year total.

Two of the biggest beneficiaries of Apple’s dividend payments are billionaires Arthur Levinson and Tim Cook who own 4.53 million shares and 3.53 million shares of Apple respectively, accounting for a combined $37 million of dividend payments over five years. 

AT&T (Fortune Rank #30)

5-year U.S. Profit: $96.3 billion
5-year Federal Income Tax: $2.5 billion (2.6%)
5-year Total Stock Buybacks & Dividends: $77.8 billion (31 times more than paid in taxes)
Buybacks: $9.6 billion (4 times more)
Dividends: $68.2 billion (27 times more)

Part of the triopoly of wireless providers and with almost $100 billion in profits over five years, AT&T still nickels and dimes its customers, according to a consumer lawsuit it settled in 2022. The suit alleged the phone company buried a mysterious $2 “administrative fee” in its billing statements, a fee it didn’t announce or include in its advertised prices. 

The company’s effective average annual tax rate fell from 13.1% during the last four years prior to enactment of the Trump-GOP tax law in 2018 to just 2.6% in the first five years under the new law. That’s an estimated tax cut of $10 billion. That tax windfall is nearly the same amount that AT&T spent on stock buybacks ($9.6 billion) during the same time period. 

Bank of America (Fortune Rank #32)

5-year U.S. Profit: $138.9 billion
5-year Federal Income Tax: $5.3 billion (3.8%)
5-year Total Stock Buybacks & Dividends: $122.7 billion (23 times more than paid in taxes)
Buybacks: $85.5 billion (16 times more)
Dividends: $37.2 billion (7 times more)

The nation’s second largest financial institution and with close to $150 billion in profits over five years, Bank of America still has a record of chiseling its customers out of their hard-earned money. 

In 2023, the bank company paid $250 million to settle a claim from financial regulators over multiple customer abuses. They included repeatedly charging a $35 “insufficient funds” fee for the same transaction; failing to pay promised cash and points to new credit-card customers; and fraudulently opening credit-card accounts without the knowledge or permission of the named account holder, which led to unwarranted charges and damage to credit scores. 

While Bank of America was already paying only a modest 6.8% tax rate during the last four years prior to enactment of the Trump-GOP tax law in 2018, it dropped to a minuscule 3.8% in the first five years under the new law. That works out to an estimated tax cut of $4 billion. Over those same five years, Apple boosted its stock buybacks by $60 billion, a 239% increase.

Citigroup (Fortune Rank #36)

5-year U.S. Profit: $35.3 billion
5-year Federal Income Tax: $1.5 billion (4.3%)
5-year Total Stock Buybacks & Dividends: $71.8 billion (48 times more than paid in taxes)
Buybacks: $45.8 billion (31 times more)
Dividends: $26 billion (17 times more)

Citigroup is the nation’s fourth largest bank by assets but the biggest by number of accounts, some 200 million worldwide. Earlier this decade, it paid a $400 million fine assessed by federal bank regulators for the firm’s “unsafe and unsound banking practices,” which included failure to interdict money laundering. 

Exxon Mobil (Fortune Rank #3)

5-year U.S. Profit: $14.8 billion
5-year Federal Income Tax (Rate): $1.5 billion (10.4%)
5-year Total Stock Buybacks & Dividends: $91.2 billion (61 times more than paid in taxes)
Buybacks: $16.9 billion (11 time more)
Dividends: $74.3 billion (48 times more)

In the five year period examined, Exxon Mobil produced roughly 178.5 billion gallons of oil and gas. If the company had foregone all its dividend payments and stock buybacks, it could have used that money to cover the cost of lowering drivers’ gas prices by 51 cents per gallon for every day of those five years. If Americans used 489 gallons of gasoline per-year filling up their cars during that period (as they did in 2021), a 51 cent reduction in the price of gas would have saved them $1,247 over the past five years. 

JPMorgan Chase (Fortune Rank #23)

5-year U.S. Profit: $176.5 billion
5-year Federal Income Tax: $20.4 billion (11.5%)
5-year Total Stock Buybacks & Dividends: $133.6 billion (7 times more than paid in taxes)
Buybacks: $72.1 billion (4 times more)
Dividends: $61.6 billion (3 times more)

Despite over $175 billion in profits over five years, JPMorgan Chase apparently couldn’t help trying to squeeze a few extra bucks out of its depositors through excessive and unexpected fees. 

A group of depositors recently sued the nation’s largest bank for charging a $12 fee for every bounced check. As the Consumer Financial Protection Bureau pointed out in 2022 guidance to banks on junk fees, a bank customer has no way of knowing whether a check is good before depositing it–charging the depositor a fee punishes the innocent victim of someone else’s crime (or at least error). 

Walmart (Fortune Rank #1)

5-year U.S. Profit: $83.4 billion
5-year Federal Income Tax: $13.5 billion (16.2%)
5-year Total Stock Buybacks & Dividends: $66 billion (5 times more than paid in taxes)
Buybacks: $35.5 billion (3 times more)
Dividends: $30.5 billion (2 times more)

Walmart, the world’s largest retailer with over $600 billion in annual sales, has recently been accused of price gouging by both former Labor Secretary Robert Reich and the current chairman of the Senate Banking Committee, Sherrod Brown (D-OH). Brown has expressed concern that Walmart is using AI and other technology to charge consumers more based on their previous shopping habits and other personal information collected online. 

The average effective annual tax rate of 16.2% tax rate Walmart paid over the first five years of the Trump tax law was little more than half the average rate it paid (30.9%) in the four years before the law. It used part of what works out to an estimated tax savings of $12.3 billion to boost its buybacks by $8 billion.

Read the full report here.