SaaSy CRM giant Salesforce.com is among the tech companies named in a think tank report for paying no corporate income tax in the US despite sizeable earnings.
According to the Institute on Taxation and Economic Policy (ITEP), a nonprofit tax policy organisation [PDF], Salesforce is among nine tech and 55 S&P and Fortune 500 companies failing to pay corporation tax.
The companies are, however, using perfectly legal mechanisms to minimise their tax bills.
ITEP said the findings continued the "decades-long trend of corporate tax avoidance by the biggest US corporations."
The report [PDF] said that the 55 companies it named "collectively enjoyed almost $40.5 billion in US pretax income in 2020," according to their annual financial reports.
With the statutory federal tax rate for corporate profits at 21 per cent, it argued they could have paid a collective total of $8.5bn for the year.
Instead, they received $3.5bn in tax rebates, creating a total tax break of $12bn.
"The software company Salesforce.com avoided all federal income taxes on $2.6bn of US income," the report pointed out.
Other tech companies among the list of those most successfully, but legally, avoiding US tax include AMD, which paid no tax on $1.2bn income; Verisign, which got a £124m rebate its £447m income; and Hewlett Packard, which managed a £24m rebate on its £861m income.
They join Akamai Technologies, Booz Allen Hamilton Holding, Sanmina, Tyler Technologies, and Xilinx as tech firms paying no or negative income tax. Stock options are an example of a technique used to reduce tax bills. It is not at all illegal and employed by AMD, Booz Allen Hamilton, and Salesforce.com.
The ITEP report pointed out that the scale of tax avoidance has not diminished since ex-president Donald Trump introduced the Tax Cuts and Jobs Act (TCJA) in 2017, which was intended to make more American companies pay tax in the US rather than deferring tax on foreign profits.
Far from deterring tax avoidance, "it is clear that the TCJA failed to address loopholes that enable tax dodging – and may have made it worse," the report said.
AMD was named among the companies paying no tax since the law was introduced.
Salesforce, and its co-founder and CEO Marc Benioff, have long been advocates of so-called "stakeholder capitalism" so observers might be surprised at its tax strategy.
At global CEO shindig Devos, Benioff said: "There has been a mantra for too long that the business of business is business, but today the business of business is improving the state of the world."
Presumably, then, that does not mean handing over cash to elected representatives of the people to improve the state of the world on Salesforce's behalf.
Salesforce and AMD have been contacted for comment. ®