Even though these 11 companies are paying nearly 40% less in taxes, they're raising prices and squeezing consumers to enrich shareholders
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Read in The Guardian
As Congress weighs another multi-trillion dollar tax giveaway for corporations and their wealthy investors, Groundwork Collaborative today released a new policy brief, “Tax Giveaways for Gouging: How the Trump Tax Law Fueled Corporate Profiteering,” detailing how President Trump’s 2017 Tax Cuts and Jobs Act (TCJA) emboldened major corporations that provide essential goods like food, housing, and health care to hike prices on consumers while raking in record profits. The brief focuses on 11 major companies that dominate the industries that make up the majority of Americans’ household budgets each month. Despite paying 40% less in taxes since Trump’s first giveaway went into effect, these companies gouged consumers, allowing them to more than double their profits. This strategy has further enriched their shareholders and left both workers and consumers behind.
“The cost-of-living crisis facing American families is the result of deliberate decisions by corporations to hike prices, shrink products, and charge excessive junk fees,” said Elizabeth Pancotti, Managing Director of Policy and Advocacy at Groundwork Collaborative and a co-author of the report. “Now, Trump and the GOP want to hand the companies that spent the last several years ripping off working families a gilded trophy for their efforts and a permission slip to continue.”
In the policy brief, the co-authors Elizabeth Pancotti, Clara Wilson, and Emily DiVito draw from earnings call research and publicly available tax and profits data from 11 major corporations in the grocery market, health care, telecommunications, housing, and the auto repairs industry. Rather than using their windfall from the Trump tax cuts to stabilize prices over the past few years, they gouged consumers and delivered record returns to their shareholders.
Groundwork was one of the first to expose the link between corporate profiteering and inflation through earnings call research in 2021. Corporate profiteering proved to be a key driver of higher prices for families and lucrative for corporations, especially after the windfall of the 2017 tax law:
- Corporate profit-seeking drove nearly 40% of the rise in consumer prices between the end of 2019 and mid-2022, and in the first two quarters of 2024, corporate profits explained over 30% of price increases.
- Price gouging pushed corporate profits to an all-time high of $4 trillion by the end of 2024, with corporate profit margins up by nearly 75% since the enactment of the 2017 tax law.
Despite repeated promises of supercharged investment, new jobs, economic growth, and a $4,000 raise for the typical worker, the reality was far different. Wage growth and job creation slowed, and 90% of workers never saw the raises the president promised them.
Email press@groundworkcollaborative.org to speak with the report’s authors. Read the full report here.
KEY FINDINGS
Despite paying 40% less in taxes since Trump’s first giveaway went into effect, these companies continue to gouge consumers, allowing them to increase their profits by 113%.
- This strategy has further enriched their shareholders and executives, leaving workers and consumers behind. The 11 corporations in the brief raked in nearly $500 billion in profits and gave $463 billion to shareholders while paying just $140 billion in federal income taxes post-TCJA
Groceries
- PepsiCo’s effective tax rate is now 11% lower, and profits are 58% higher, compared to the two years prior to the TCJA’s enactment. PepsiCo implemented double-digit percentage price hikes for eight straight quarters while shrinking some products, including Gatorade and Doritos.
- General Mills’ effective tax rate is now 28% lower, and profits are 75% higher. The company hiked prices by as much as 20% for some items while shrinking product sizes as well, such as a 10% reduction in the size of family-sized cereal boxes.
Home & Personal Care
- Procter & Gamble’s effective tax rate is now 22% lower, and profits are 70% higher. The company implemented price increases in the first quarter of 2023 that were nearly double increases in input costs.
- Kimberly Clark’s effective tax rate is now 50% lower, and profits are 36% higher. The company’s executives have consistently bragged that their outsized pricing power stems from a lack of demand elasticity in their industry because of the “essential nature” of their products.
Car Repairs
- O’Reilly Automotive’s effective tax rate is now 46% lower, and profits are 140% higher. O’Reilly’s executives have said they were “looking for opportunities to increase prices” and “very confident that to whatever degree that we do see any relief on the cost side that the industry will be able to maintain [high] selling prices.”
- Autozone’s effective tax rate is now 37% lower, and profits are 116% higher. In the second quarter of 2022, the CFO said, “inflation has been our friend, it’s helped us drive higher pricing.”
Telecommunications
- Comcast’s effective tax rate is now 12% lower, and profits are 88% higher. Between 2017 and 2020, their margins increased by more than 9%. In mid-2022, they bragged to investors about their “margin reach[ing] a record high of nearly 45%.” Margins continued to expand, topping 47.3% by the second quarter of 2023.
Housing
- Lennar’s effective tax rate is now 25% lower, and profits are 359% higher. Between 2017 and 2024, the company’s profit margins increased by 55%. Despite the fact that there is a considerable affordable housing shortage in the U.S., in 2021, Lennar’s CEO told investors that the company “slowed sales to generate higher profits.”
- D.R. Horton’s effective tax rate is now 31% lower, and profits are 480% higher. The company’s margins for its financial services segment – which provides mortgage financing for homebuyers, including 78% of homes the company built and sold last year – increased by 21% between 2016 and 2024.
Health Care
- UnitedHealth Group’s effective tax rate is now 65% lower, and profits are 187% higher. Profit margins for the company increased by 16% between 2017 and 2022. In 2022, returns to shareholders were $13 billion, an increase of 204% from 2017. By 2024, they topped $16.5 billion, a jump of nearly 300% since the TCJA’s implementation.
- Elevance Health’s effective tax rate is now 41% lower, and profits are 138% higher. In the first 6 months of 2023, the company’s profits jumped 14.4% over the same period in 2022 as they denied coverage and forced patients to out-of-network providers to keep their costs low while charging beneficiaries high premium costs.
