Another year, another pass from the federal income tax for the profitable California-based utility giant Pacific Gas & Electric (PG&E).
The company’s annual report released earlier this week discloses it earned $1.8 billion in U.S. profits in 2014—and didn’t pay a dime in federal income taxes. In fact, the company received an $84 million federal tax rebate, which means its federal tax rate for the year clocks in at a healthy negative 4.6 percent.
For corporate tax observers, this is about as surprising as the sun rising in the east: PG&E has now avoided paying any federal income tax for seven straight years. That’s right, the last time PG&E wrote an income tax check to the federal government was during the administration of George W. Bush. Over this seven-year period the company enjoyed $9.99 billion in U.S. profits and received an astonishing net federal income tax rebate of $1.48 billion.
It’s not always easy to understand how companies get away with tax avoidance as extensive legislative hearings over Apple and Google have demonstrated. But in PG&E’s case, it’s clear as day: it pays no corporate income taxes because Congress continues to pass tax policies that essentially mean it doesn’t have to.
… about those tax extenders
Like many utilities, PG&E zeroes out its corporate tax by claiming large “accelerated depreciation” tax breaks, which allow the company to write off the cost of its capital investments (such as machinery and other equipment) much faster than they actually wear out. In each year since 2008, the company has taken advantage of the tax code’s “bonus depreciation” provision introduced as a stimulus measure by Bush--and continually extended by Congress and President Obama as part of a larger package of so-called tax extenders-- to further drop its tax bill.
The good news? The “bonus depreciation” provision expired two months ago at the end of 2014. So if Congress can restrain itself from once again resurrecting this giveaway during the ongoing debate over various corporate “tax extenders,” federal taxpayers—and Californians—can look forward to not having to pay for PG&E’s extended tax-free holiday. But incredibly, congressional leaders seem poised to extend not just bonus depreciation but a whole raft of other misguided temporary tax breaks in the months to come. PG&E is a highly profitable company. Its seven-year tax break should help jog lawmakers back to their senses.