Originally published May 21, 2020
Corporations across America have booked more than $7 billion in savings using tax breaks that Congress passed as part of its plan to stabilize the U.S. economy through the coronavirus crisis, according to an Orlando Sentinel review of investor filings.
The corporate tax breaks have steered hundreds of millions of dollars to companies that are thriving during the COVID-19 pandemic — including a drug manufacturer that said the virus boosted its quarterly sales by $75 million and a company making N95 masks for the federal government. Even the tech platform Grubhub Inc., where orders rose while millions of Americans sheltered in place, scored at least $6.8 million in savings.
The tax breaks have also rewarded some companies for mistakes they made long before the novel coronavirus emerged. They have helped other companies send more money to their investors through richer dividends and faster stock buybacks. And in at least one case, the tax savings are passing from a smaller business to a bigger one: The struggling women’s clothing retailer Francesca’s Holdings Corp. has filed for a $10.7 million tax refund but will immediately give the money to banking giant J.P. Morgan Chase & Co., according to the terms of a loan agreement between the two companies.
Trinity Industries Inc., which makes freight and tank cars for railroads, expects to get $303 million in refunds. Wearable-tech company Fitbit Inc. reported a $145 million tax benefit. Amneal Pharmaceuticals Inc., which makes the anti-malarial drug hydroxychloroquine that has been championed by President Donald Trump, expects a $110 million refund in the second half of the year.
To be sure, the tax breaks have provided an important cushion for scores of businesses that have been hit hard by the COVID-19 pandemic and the historic economic downturn it has caused — from airlines and hospital systems to restaurant, hotel and amusement park chains. Oil and gas companies, which have also been crushed by collapsing oil prices, have reported some of the biggest tax savings of all.
But if the goal was to throw another coronavirus lifeline to corporations, Congress “probably could have done a little better job in terms of targeting,” said David Hasen, a University of Florida professor of tax law.
“The government could have just as easily handed out cash,” Hasen added. “It might have been more effective to do it that way from an economic perspective. But there’s long been an aversion to the idea that governments give handouts. This is economically identical, but the optics are better for the government.”
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