Just as most Americans are in the throes of preparing their income tax returns, a report released Thursday finds that Florida Power & Light’s parent company, NextEra Energy, paid no federal income taxes in six out of eight years from 2008 to 2015.
Thanks to corporate tax credits, depreciation and other “corporate loopholes,” the tax breaks were perfectly legal for Juno Beach-based NextEra and other Fortune 500 companies. Although the statutory corporate tax rate is 35 percent, the companies paid an average effective rate of 21.2 percent.
The study, The 35 Percent Corporate Tax Myth conducted by the left-leaning Institute on Taxation and Economic Policy in Washington, D.C., examined eight years of data on federal income taxes of 258 profitable companies.
NextEra Energy spokesman Mark Bubriski called the report a stunt that intentionally leaves out relevant context in order to paint a negative picture.
“The reality is, we are investing billions of dollars in advanced energy infrastructure across the country, and paying billions of dollars in taxes,” Bubriski said.
Matthew Gardner, an ITEP senior fellow and lead author of the report, said, “Over the past eight years from 2008 to 2015, NextEra Energy made $21.5 billion in U.S. profits on which they paid no taxes as a whole. However, there were specific years, most notably 2015, in which the company did pay some small amount of taxes.”
In 2015 NextEra paid $10 million on $3.9 billion in profits, and paid a similar amount in 2010 as well, Gardner said. NextEra owed no taxes in 2008, 2009, 2011, 2012, 2013 and 2014.
NextEra’s Bubriski stressed that the investments are creating tens of thousands of jobs and powering millions of Americans with affordable clean energy.
NextEra Energy is the world’s largest producer of solar and wind energy and is expanding those resources on an enormous scale, Bubriski said. Many of its investments qualified for accelerated depreciation.
NextEra operates in 30 states, and pays local and state taxes, Bubriski said. Corporations pay a state income tax in Florida. FPL was Palm Beach County’s largest property taxpayer in 2016, with $98.6 million in property taxes, and is also the largest taxpayer statewide.
NextEra is one of 18 companies, along with other big names such as General Electric, Priceline.com, International Paper and Ryder System, on the list of those which ended up paying net zero taxes during eight years.
The report is based on annual reports filed with the U.S. Securities and Exchange Commission.
Fourteen of the companies which paid net zero taxes, including Pepco Holdings, PG&E and Duke Energy, are in the power sector.
“Corporations can zero out their taxes or pay substantially less than the statutory corporate tax rate thanks to copious loopholes in the tax code,” the report states.
For the energy sector, especially, tax breaks Congress has enacted to encourage companies to make investments in facilities such as power plants, have played a major role.
Using accelerated depreciation, companies are allowed to write off the cost of some of the investments they make, Gardner said.
“They will let them defer their taxes, postpone them to a different year. The idea is eventually you will have to pay taxes on this income. Companies are constantly making capital investments. They will keep racking up tax breaks until the cows come home,” Gardner said.
Collectively, the 258 corporations enjoyed $526 billion in tax breaks over the last eight years. NextEra’s tax breaks totaled $7.84 billion.
The five biggest beneficiaries of tax breaks were:
AT&T $38 billion
Wells Fargo $31 billion
J.P. Morgan $22 billion
Verizon $21 billion
IBM $17.8 billion