KTLA

How does Tesla get away with paying $0 in federal taxes? And how can we fix that?

Tesla reported $5.5 billion in profit last year. It depends on federally funded roads, bridges and freeways for its electric vehicles. Yet the company pays $0 in federal taxes.

What’s wrong with this picture?

Well, everything, not least that Tesla is apparently in compliance with the U.S. tax code, which contains so many loopholes and exemptions that a multibillion-dollar corporation swimming in cash can legally avoid paying a cent to Uncle Sam.

Tesla explains its avoidance of federal taxes by insisting that all of the company’s profit comes from overseas. It’s U.S. operations, the company says, lose money.

Therefore, as per the terms of the tax code, Tesla owes no federal taxes.

While this may be perfectly legal, it’s clearly not right.

Not only do all U.S. businesses have an obligation to contribute their fair share to public coffers, but Tesla, due to its reliance on well-maintained transit infrastructure, simply would not be able to operate without the support of American taxpayers.

It’s also not uncommon for U.S. businesses with extensive overseas operations to indulge in a little creative accounting so their domestic units appear to lose money, even though, as in Tesla’s case, they account for a significant part of overall revenue.

What can be done? Any rejiggering of tax law is a complex and often politically perilous process. But there are measures lawmakers could (and should) explore.

Just as the alternative minimum tax is intended to prevent wealthy people from squirreling away all their money in offshore tax havens, a corporate minimum would address situations like Tesla’s.

How about any U.S. company that earns profits, regardless of source, at least meet a minimum threshold of federal tax payments?

Moreover, if it can be shown that a U.S. business indisputably benefits from public resources, there should be a provision in the corporate tax code that the company’s tax payments reflect this.

Again, it doesn’t appear that Tesla, and similar businesses, are breaking any laws.

But that means our laws are broken. And need to be fixed.