Some big companies oppose potential tax hikes, but want to profit from infrastructure deal

The chief executive at America’s largest steel manufacturer was tired of politicians just talking about building new roads and bridges. Nucor’s Leon Topalian told investors in April that a federal infrastructure deal “must get done.”

And his firm was eager to help.

“There is arguably no company more poised and ready to meet the needs of rebuilding our country than Nucor,” Topalian said.

But he didn’t want Nucor hit with a higher tax rate to help pay for the flood of public projects, even though the steelmaker already managed to pay no U.S. income taxes last year.

At least a dozen profitable major U.S. companies like Nucor paid little or no U.S. income tax in 2020—or, in some cases, over several years—and today are active in industry groups that object to helping fund with taxes the same public projects they want to profit from, according to interviews and data compiled by The Washington Post.

At AECOM, the engineering firm’s leader recently told investors he expected a major boost to the bottom line from an infrastructure deal. Weyerhaeuser’s chief executive called it “a nice little tail wind for us.” And huge contracting firm Tutor Perini’s chief executive recently said it would be great for his business, too.

These companies—construction and engineering firms, along with manufacturers—support a deal to fix America’s crumbling bridges and antiquated water pipes that will give them a surge in new business. They also belong to industry groups that argue against raising corporate taxes to fund new infrastructure projects, claiming it will hurt their ability to compete against foreign firms—three years after U.S. corporate tax bills were slashed to the lowest level in more than half a century.

“I think it’s completely outrageous,” said Steven Rosenthal, a senior fellow at the nonpartisan Urban-Brookings Tax Policy Center.

It’s no secret that most of Corporate America opposes President Joe Biden’s push to pay for $2.3 trillion in new infrastructure spending by raising the corporate income tax rate from 21% to 28%. A competing proposal from a bipartisan group of senators would spend $1 trillion from a grab bag of different sources, without raising corporate taxes—a sign of corporate power in guiding public policy.

Most company leaders have been careful to avoid publicly stating their objections to higher taxes. But the powerful trade groups many of them belong to—the Business Roundtable, U.S. Chamber of Commerce and the National Association of Manufacturers—have aggressively attacked any notion of a tax hike.

A tax expert with the Business Roundtable, whose members are CEOs of America’s largest companies, recently claimed that hiking corporate taxes would be “to the detriment of American jobs and workers especially during a time of critical economic recovery.”

Nucor’s top executives are leaders at two other, smaller business groups also fighting higher taxes.

A Nucor spokeswoman did not answer questions from The Washington Post about the company’s objections to raising taxes to pay for infrastructure this year. But spokeswoman Katherine Miller defended the 2017 tax cuts—when U.S. corporate rates fell from 35% to 21% beginning in 2018—noting they were intended to encourage companies to grow and create jobs. “That is exactly what Nucor is doing,” Miller said.

Many companies have found ways to reduce their U.S. income taxes even further than the 2017 overhaul, in some cases to zero—highlighting how the political debate about corporate taxes can miss the business world’s reality.

While the official U.S. corporate tax rate is 21%, the true rate paid in early 2021 by all S&P 500 firms stood at an average of 18.4%, according to Edward Yardeni, an independent research economist.

“Standing in that gap is a whole bunch of tax lawyers,” Yardeni said.

Nucor’s actual U.S. tax rate last year was well under zero: minus-17%. The company got a $177 million tax rebate to go along with a $1.22 billion U.S. profit.

This perfectly legal result was so impressive that another Nucor executive, Jim Frias, gave “a shout out” to the firm’s tax team during an earnings call earlier this year.

But that hasn’t tempered these companies’ enthusiasm for taxpayer-funded public projects.

“It seems these companies are talking out of both sides of their mouth,” said Jeff Hoopes, a tax expert and an associate professor at the University of North Carolina at Chapel Hill.

Hoopes said he didn’t blame the companies. They are pursuing their self-interested outcomes abetted by a corporate tax code that makes it possible, he said.

“It’s much better for them if someone else pays for it,” Hoopes said.

Fabio Gaertner, an associate professor of accounting at the University of Wisconsin at Madison, was also not surprised by the corporate behavior.

“I feel like, on one hand, everyone wants free stuff,” Gaertner said.

He said it’s up to politicians to decide how to pay for it.

But Chuck Marr, senior director of federal tax policy at the left-leaning Center on Budget and Policy Priorities, said the situation underscores problems with the corporate tax code.

Companies saw their income tax rate slashed just a few years ago. And the amount of money generated from corporate income taxes, compared to the overall economy, has been dropping for decades.

“Where would they be without the federal government’s spending?” Marr said. “How can they say they won’t pay for it?”

Companies have lots of tools for lowering their tax bills. Nucor recorded a taxable loss last year as it exited a joint venture in Italy, according to a company spokeswoman. And many companies reduced their tax burden last year thanks to coronavirus-related legislation allowing them to carry forward losses from previous years.

Nucor said it paid a total of $1.4 billion in federal income taxes from 2017 to 2019. While that is a significant amount of money, it works out to an average tax rate of 20.5% during that period—when the statutory rate was 35% for one year and 21% for two years.

The public appears to support a corporate tax hike, with 58% of Americans supporting Biden’s push to raise it from 21% to 28%, according to a Washington Post/ABC News poll earlier this year.

And the need to fix America’s crumbling bridges and leaky water pipes is clear, at times illuminated by industry groups who would benefit from the work.

Earlier this year, the American Society of Civil Engineers released to much fanfare its annual infrastructure report card, which gave the country a C-minus. The report also called on Congress to spend more money to address the problem.

Nucor’s Topalian helped promote the report’s release. He is also chairman of the American Iron and Steel Institute, which supports funding infrastructure projects with user fees. Frias, the company’s chief financial officer, is a board member at the National Association of Manufacturers, which also wants to avoid a corporate tax hike to pay for public works.

Other companies also spotted an opportunity in the drumbeat of stories focused on the country’s infrastructure problem.

“I think, for me, the good news is that our nation’s infrastructure problem and potential solutions are on the front page of the paper every day,” J. Thomas Hill, chief executive of Vulcan Materials, said during an earnings call in May.

Vulcan is a Birmingham, Ala.-based company that makes most of the county’s construction gravel and sand.

“Clearly, our leading market positions will mean broad participation in infrastructure-related spending,” Hill told investors in February.

Over the last decade, Vulcan’s paid an average actual U.S. income tax rate of just 9.5%.

Vulcan declined to comment for this story, refusing to address questions about the company’s views on a higher tax rate to pay for taxpayer-funded projects.

However, Vulcan is a member of the National Ready Mixed Concrete Association, one of the 28 industry groups that earlier this year formed “America’s Job Creators for a Strong Recovery.” This mega-trade group made it clear that its members want public infrastructure—but not higher corporate taxes.

The same message came from the Business Roundtable, the National Association of Manufacturers and the U.S. Chamber of Commerce. They issued a joint statement last month saying that “instead of tax increases that would harm American businesses and workers,” infrastructure should be funded with user fees, government bonds and public-private partnerships.

W. Troy Rudd, head of Los Angeles-based engineering firm AECOM, is a member of the Business Roundtable. His firm posted an average U.S. tax rate of minus-62% from 2015 to 2019. That’s millions of dollars in tax refunds, while the company posted $221 million in U.S. profits.

In May, Rudd told investors that AECOM anticipated a surge in new infrastructure funding. He said Biden’s plan could boost its domestic design business by 15% to 20%.

“So that would be incredibly meaningful if it got done,” Rudd said.

AECOM declined to comment.

At Weyerhaeuser, one of the largest makers of wood products in America, chief executive Devin Stockfish said in April the company could see “another 1 billion, 1.5 billion board feet of incremental demand on the lumber side” from a deal.

Weyerhaeuser hasn’t paid U.S. income taxes on average in a decade. In fact, it posted a minus-5% tax rate.

The head of one of the country’s largest general contracting firms, Tutor Perini, told investors in May that an infrastructure deal “will just pour more money” into a marketplace that is already doing well. Chief executive Ronald Tutor said the only problem is, “we run out of the engineering talent to build it.”

Tutor Perini managed a minus-37% actual U.S. tax rate last year.

An infrastructure deal would “benefit Jacobs, its upside,” said Steven Demetriou, chief executive of Jacobs Engineering, which got a rebate on its U.S. income taxes in 2020 despite posting $213 million in pretax U.S. income.

Jacobs did not respond to a request for comment.

Jacobs was among 55 large companies included on an annual list of firms that don’t pay U.S. income taxes put together by the left-leaning Institute on Taxation and Economic Policy.

Caterpillar, the construction and mining equipment maker, paid a 3.2% U.S. tax rate last year on pretax income of $559 million.

The Deerfield, Ill.-based company is widely viewed as the bright yellow symbol of American manufacturing. It was a vocal supporter of cutting corporate tax rates in 2017.

But it has been quiet about Biden’s push to raise corporate tax rates. Caterpillar also did not respond to questions from The Post about how the company felt about a higher corporate tax rate.

However Caterpillar executives sit on the boards of major business groups fighting tax hikes.

At the same time, Caterpillar executives have been less shy about expressing their support for spending taxpayer money.

Caterpillar chief executive James Umpleby said in June at a Wall Street investors conference that fixing the nation’s roads, bridges and ports is important for America’s competitiveness.

And a huge, taxpayer-funded infrastructure bill “would certainly be a positive for us,” Umpleby said, adding, “we’re just very excited about that.”