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CNBC’s Jim Cramer on Thursday said that while headwinds facing the used car market make it un-investable, its declining performance is also an indicator that inflation might be cooling.
“When everybody was freaking out about the 8.5% consumer price index number – that is a hot number – you might’ve noticed that used car and truck prices were down 3.8% from the previous month,” he said.

CNBC’s Jim Cramer on Thursday said that while headwinds facing the used car market make it un-investable, its declining performance is also an indicator that inflation might be cooling.
“When everybody was freaking out about the 8.5% consumer price index number – that is a hot number – you might’ve noticed that used car and truck prices were down 3.8% from the previous month,” he said.

“While that’s bad news for the used car industry, it could be a fabulous sign for the broader economy because it means we’re finally making some progress in getting inflation under control,” he added.
The “Mad Money” host’s comments come after CarMax reported better-than-expected revenue but missed on earnings in its latest quarter. JPMorgan downgraded the stock due to concerns about how vehicle affordability could affect CarMax’s performance.
“We’re finally seeing what’s known as demand destruction. People just don’t want to buy as many used vehicles if they’re going to have to pay that much. … In the end, used car prices can’t keep soaring like this forever,” Cramer said of CarMax’s quarterly results.
He added that while now is not an optimal time to own a used car stock, he does have one option to offer investors still wanting to try their luck.
“If you insist on owning a used car play, I say go with Lithia. …. I think it’s the wrong moment for this one, too, but if you disagree with me, Lithia’s the way to go,” he said.

He also said he has some confidence in the performance of used and new car dealerships including AutoNation, Sonic Automotive, Group 1 Automotive and Asbury Automotive. 
“They benefit from the return of new car supply, as the automakers finally get their supply chains in order. More importantly, these dealerships are actually profitable and their stocks are fairly reasonable. Honestly, though, they’re so cheap that you’ve got to worry that the estimates need to come down,” he said.
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Launched in January 2011, HotelTonight looked to popularize a part of the travel and leisure sector that its founders felt had been overlooked: last-minute and same-day bookings.
The company quickly gained traction as it leaned into its mobile-first experience that resonated well with a younger, more cost-conscious demographic.
Ultimately Airbnb acquired HotelTonight on its road to an IPO in March 2019 in a deal reported to be worth more than $400 million.

HotelTonight CEO Sam Shank
Ben Robertson

In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.
Like many mobile-first, on-demand service-based companies started in the early 2010s, HotelTonight saw similarities with two of the biggest disruptors in that category.

“That’s how the world is moving: with Uber, you push a button and get a car; with GrubHub, you push a button and you get food,” HotelTonight CEO and co-founder Sam Shank said during a June 2013 appearance on CNBC’s “Squawk Box.”
“With us, you push a button, and you get a place to stay,” he said. “We’re the app for on-demand shelter.”
Launched in January 2011, HotelTonight looked to popularize a part of the travel and leisure sector that its founders felt had been overlooked: last-minute and same-day bookings.
“The idea from the start was all about trying to bring the idea to the mainstream that spontaneous travel is just more fun and rewarding,” Jared Simon, the former COO and co-founder of HotelTonight, said in a recent interview. “At the outset, that was not a concept that was mainstream in the least, and we got a lot of pushback about the notion.”
But HotelTonight quickly gained traction as it leaned into its mobile-first experience that resonated well with a younger, more cost-conscious demographic.

“At the time, the process of booking travel was like buying a house or applying for a loan,” Simon said. “The amount of information and time you had to give up sort of killed any sort of spontaneity in traveling at all and just made it feel like a transaction, not an experience.”
Simon said that travelers would often tell them that they “had been treated really poorly by the incumbent online travel agencies for years,” and HotelTonight instead tried to “prove that we could develop a real partnership with them.” That led to a focus on things like simplifying the information you had to enter and providing more images and well-written descriptions of the rooms themselves, features that Simon said have “become much more pervasive now.”
Even the concept of last-minute bookings was cribbed by some of the incumbents. Booking.com launched its own Booking Now app in 2015, which it shut down roughly two years later, while several other clones popped up around the globe with similar business models.
While Shank said in 2013 that the company wouldn’t look to “go after the entire market of travel,” HotelTonight did make a shift over time to become a more traditional hotel booking platform, expanding its booking window, adding a desktop browser version and even leaning into more luxury hotel deal offerings for their cost-conscious base.
In 2017 it announced a $37 million Series E round that took it to a $463 million valuation, bringing its total funding to $126.9 million from firms like Accel Partners, Battery Ventures, and First Round Capital, according to Crunchbase. It even struck partnership deals with Madison Square Garden and the New York Yankees, providing geolocated offers to fans at sporting events and concerts.
“We were fortunate we were in a space where we were one of the earliest mobile-only commerce apps,” Simon said. “That gave us some latitude and some space to work because the larger behemoths hadn’t figured out how to colonize that space yet, so we were able to pioneer some marketing concepts and other ways of reaching consumers that gave us a beachhead, and then allowed us to take another step with the MSG partnership and other areas where we were innovating on in addition to the core product.”
HotelTonight grew to the point that it had more than 25,000 hotels in approximately 1,700 cities worldwide on its platform.

The original CNBC disruptors: Where are they now?

Ultimately Airbnb acquired HotelTonight on its road to an IPO in March 2019 in a deal reported to be worth more than $400 million. Simon said the deal was something that “just made sense,” as the companies “were very complimentary in terms of product.”
At the time, Airbnb CEO and co-founder Brian Chesky said the move was a “big part of building an end-to-end travel platform.” The company also cited the demand from and for boutique hotels to be on Airbnb. Airbnb said at the time of the acquisition that the HotelTonight app and website would operate as it had before, something that is still true.
However, less than a year later the Covid-19 pandemic hit, which presented a new set of challenges for Airbnb to navigate while also trying to build that end-to-end platform HotelTonight was expected to be a big part of.
Jed Kelly, managing director of equity research at Oppenheimer & Co., said HotelTonight has “been operating pretty quietly within Airbnb.”
“It hasn’t been a big focus of the company just judging by the last like four shareholder letters, they don’t talk about it,” Kelly said. “When you see the Airbnb commercials it says ‘Made possible by hosts.’ That doesn’t really scream hotels.”
A spokesperson for Airbnb declined to make an executive available for comment.
Andrew Boone, a managing director at JMP Securities, said while HotelTonight had likely helped Airbnb accelerate its relationship with hotels, he said “it’s hard to say if it’s been either successful or unsuccessful just because of everything that has happened that is exogenous to Airbnb.”
Part of the challenge, Boone said, will be to see how travel trends evolve moving forward. Airbnb has benefitted from the trend of travelers choosing longer stays at alternative accommodations, often outside of major city centers, Boone said. HotelTonight, on the other hand, was more city-located, often appealing to customers who may have traveled for work last minute or stayed late after a show or sporting event, travel and entertainment sectors that haven’t bounced back as well.
Simon said that he believes coming out of the pandemic there will be a larger desire for “spontaneous travel,” which was an initial guiding principle of HotelTonight.
“I think it’s one of those changes we’ll see, that people recognize the value of the experience and the value of not making plans and the value of living life as it comes,” he said. “Travel will be back, and we’re already seeing a lot of evidence of that. Hotels will be at the center of that.”

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American asked line pilots to come in on their days off to participate with simulator training for pilots.
The Allied Pilots Association argued that would constitute a change in work rules, which would require negotiation with the union.
Airlines are racing to hire and train pilots as travel demand surges.

An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on December 10, 2021 in Miami, Florida.
Joe Raedle | Getty Images

The union that represents American Airlines’ pilots sued the carrier in federal court Thursday to block a program that encourages aviators to help with simulator training, an initiative the carrier launched as it races to add staff and meet strong travel demand.
The Fort Worth, Texas-based airline asked line pilots to come into one of American’s training centers on their days off to participate in pilots’ simulator sessions, which is normally handled by specially trained check pilots. A check airman would still conduct the evaluation.

“As demand continues to grow and we continue to hire, we need to expand our pilot-training capabilities to a historically unprecedented level,” said Lyle Hogg, vice president of flight operations training, in a note to pilots.
But the Allied Pilots Association argued in its suit, filed in U.S. District Court for the Northern District of Texas, that the training sessions would constitute a change in work rules, which would require negotiation with the union.
“Management right now is making up rules as they go along,” said Dennis Tajer, spokesman for the union, which represents some 14,000 American Airlines pilots. “They’re in a crisis to get pilots through training. They’re underwater trying to get as many pilots through as possible.”
The lawsuit comes as American and other carriers are scrambling to hire as many pilots as possible as passengers return in droves.
Correction: American Airlines pilots were asked to participate in simulator sessions on their days off. A previous version of this story mischaracterized the pilots’ role in the trainings.

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AS TWEETS GO “I made an offer” seems relatively unexciting. But when the offer in question is from Elon Musk to buy Twitter, the social-media platform itself, that is a different matter. On April 13th the boss of Tesla and SpaceX made a cash offer of $54.20 a share, valuing the firm at $43.4bn. The bid is a third higher than Twitter’s price when Mr Musk first revealed that he had built up a stake in the company. His plaintive tweet raises another barrage of questions about the future of Twitter and the world’s richest man.Mr Musk set out his reasoning in a filing with the Securities and Exchange Commission, America’s main financial regulator. He believes that Twitter has “potential to be the platform for free speech” which he sees as a “societal imperative”. Achieving this and letting the company thrive requires it to be taken private, he reckons. Mr Musk signed off the filing by saying: “Twitter has extraordinary potential. I will unlock it.” He later said that he was not in it for profit but the public interest in maintaining a “de facto town square”.The bid is the latest twist in weeks of drama. On April 4th, Mr Musk announced that he had built up a 9% stake in the company to become its largest shareholder. This excited investors. Twitter’s share price jumped by 27% the same day. He was then invited to join the board. He rejected the offer but has tweeted a list of improvements the platform could make. Why then have investors reacted with little enthusiasm to the bid? So far Twitter’s shares have barely shifted. Perhaps it is hard to take the offer and Mr Musk’s stated motivation seriously. After all, he has a history of clownish antics. The offer price of $54.20, for example, may be a thinly veiled reference to 420, a number that potheads hold dear and one that Mr Musk has joked about before.Yet Mr Musk has hired Morgan Stanley, a bank, as a financial adviser to execute the offer. He has the means to pay for it. His personal wealth exceeds $200bn, though he would have to sell shares in Tesla, a publicly traded carmaker or SpaceX, his privately held rocket company, or bring together a consortium of other buyers. Mr Musk’s belief that Twitter can thrive as a free-speech haven should not be sniffed at either. Strongly held convictions have been a driving force when building his other companies. For Tesla it was his faith that decarbonisation is vital; for SpaceX his obsession with space flight.A takeover would be a welcome shake up for Twitter. Take the company’s content-moderation rules. Like all social-media platforms, they are impossible to enforce without hiring human moderators in such huge numbers as to bankrupt the company. As a result enforcement is arbitrary, inviting criticism from left- and right-wing commentators alike. User numbers is another weakness. In America, Twitter’s biggest market by revenue, the firm’s daily active users number 40m, around half that of Snapchat or TikTok, two social-media rivals. Twitter has been trying to lure creators (and their fans) from other platforms with new features, such as subscription tweets and virtual events. But these ventures have yet to pay off. One risk, which may explain investors’ tepid response, is that Mr Musk takes on too much. He is a hands-on manager and even for a workaholic, running Twitter on top of Tesla, SpaceX and smaller ventures such as Boring Company, a tunnelling firm, and Neuralink, a brain-computer interface firm, could stretch him beyond his limits.Twitter’s board must now review the offer. Rumours are rife that they intend to fight off Mr Musk perhaps using a “poison pill”. The offer may also flush out other bidders, such as asset managers, private-equity firms or tech giants. Vanguard Group, a huge investment fund, has overtaken Mr Musk by increasing its stake in Twitter to 10.3%. In Mr Musk’s filing he said: “I am not playing the back-and-forth game…I have moved straight to the end”. But the end may not yet be in sight. For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Peloton is hiking the monthly fee for its on-demand fitness content for the first time ever.
The connected fitness equipment maker is also slashing the prices of its Bike, Bike+ and Tread machines in a bid to reach new customers under Chief Executive Barry McCarthy.
The moves come as Peloton is attempting to turn around a recent sharp decline in its share price.
McCarthy, a former Netflix and Spotify executive, has been candid in recent press interviews about what he viewed as an opportunity at Peloton to cut hardware costs.

A Peloton Interactive Inc. logo on a stationary bike at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.
Adam Glanzman | Bloomberg | Getty Images

Peloton is hiking the monthly fee for its on-demand fitness content for the first time ever, while it also slashes the prices of its Bike, Bike+ and Tread machines in a bid to reach new customers under Chief Executive Barry McCarthy.
McCarthy, who has been at the helm of the company for a little over two months, is set to announce the sweeping changes internally Thursday. It comes as Peloton is attempting to turn around a recent sharp decline in its share price.

Peloton shares initially jumped on the news before they were halted shortly after 11 a.m. for trading volatility. The stock closed the day down 4.6%.
McCarthy, a former Netflix and Spotify executive, has been candid in recent press interviews about what he viewed as an opportunity at Peloton to cut hardware costs. This, in theory, would lower the barrier to entry for a consumer, and then the company could pivot its focus to growing monthly recurring revenues.
“The pricing changes being announced today are part of CEO Barry McCarthy’s vision to grow the Peloton community,” a company spokesman told CNBC.
Effective June 1, the price of Peloton’s all-access subscription plan in the United States will go up to $44 per month, from $39. In Canada, the fee will rise to $55 per month, from $49. Pricing for international members will remain unchanged, Peloton said. The cost of a digital-only membership, for people who don’t own any of Peloton’s equipment, will still be $12.99 a month.
Peloton explained the decision in a company blog post shared with CNBC. “There’s a cost to creating exceptional content and an engaging platform,” the company said. The price increases will allow Peloton to continue to deliver to users, it added.

Meantime, beginning Thursday at 6 p.m. ET, Peloton will slash the prices of its connected-fitness bikes and treadmills in hopes of making its products more affordable to a wider audience and increase its market share coming off of a pandemic-fueled surge in demand.

The price of its Bike will drop to $1,445 from $1,745. The cost includes a $250 shipping and set-up fee.
The Bike+ will drop to $1,995 from $2,495.
The Tread machine will sell for $2,695, down from $2,845. The Tread cost includes a $350 shipping and set-up fee.

Peloton is also currently testing a rental option in select U.S. markets, where users can pay a monthly fee anywhere between $60 to $100 for a rented Bike and for access to its workout content library. The company said it recently expanded the test to additional markets and has added the Bike+ as another rental option.
As of Dec. 31, Peloton counted 2.77 million connected fitness subscribers. It has more than 6.6 million total members, including people who only pay for access to its workout classes.
The company has already shown a penchant for making its hardware more affordable, particularly as McCarthy pushes the subscription model. Earlier this month, it began selling its new strength product, Peloton Guide, for $295. That’s $200 less than what Peloton last November said the device, bundled with a heart rate armband, would retail for.

Peloton under pressure

In recent weeks, Peloton’s stock has been trading below $29, where it priced at its initial public offering in 2019, also putting it back at pre-pandemic levels. Shares have fallen almost 35% since the day McCarthy was announced as CEO.
McCarthy took over in early February as CEO from Peloton’s founder, John Foley, who is now serving as executive chairman.
At the time, Peloton also announced plans to cut about 2,800 jobs across its business and get rid of hundreds of thousands of dollars in annual expenses, as part of a massive restructuring and operational reset.
Still, there are concerns that McCarthy, who says he still works closely with Foley, isn’t doing enough to get back to profitability.
On Wednesday, activist Blackwells Capital reiterated its call for Peloton to consider a sale of the company, arguing in a presentation that shareholders in the business are worse off now than they were before McCarthy took over. Peloton didn’t comment.
What Blackwells and other analysts can agree on, however, is that Peloton has built a loyal base of subscribers who have invested in the company’s workout equipment and continue to pay the monthly fee for content to go along with it. Its average net monthly connected fitness churn in the latest quarter was 0.79%. The lower the churn rate, the better news for Peloton.
As of Dec. 31, Peloton’s connected fitness subscribers were also averaging 15.5 workouts each month.
Peloton continues to roll out new types of classes, from yoga to meditation to kickboxing, in a bid to give its members more for their money.

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I bonds, an inflation-protected and nearly risk-free investment, may soon pay an estimated 9.62%, according to experts.
While there’s a $10,000 limit for individuals per calendar year, there are a few ways to buy more. 
However, there are some downsides to consider before purchasing, such as locking up funds for one year.

Eakgrunge | Istock | Getty Images

Less risk often means lower returns. But that’s not the case with I bonds, an inflation-protected and government-backed asset, which may soon pay an estimated 9.62%.
I bonds currently offer 7.12% annual returns through April, and the rate may reach 9.62% in May based on the latest consumer price index data. Annual inflation grew by 8.5% in March, according to the U.S. Department of Labor.

“The 9.62% is an eye-watering number,” said certified financial planner Christopher Flis, founder of Resilient Asset Management in Memphis, Tennessee. “Especially given how other fixed-income assets have performed this year.”

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Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Of course, the 9.62% return is an estimate until the U.S. Department of the Treasury announces new rates on May 2. Still, I bonds may be worth a look if you’re seeking ways to beat inflation. Here’s what to know before buying. 

How I bonds work

I bonds, backed by the U.S. government, won’t lose value and pay interest based on two parts, a fixed rate and a variable rate, changing every six months based on the consumer price index.
If you purchase I bonds by the end of April, you’ll lock in 7.12% for the next six months, followed by an estimated 9.62% for another six months, for a 12-month average of 8.37%, according to Ken Tumin, founder and editor of DepositAccounts.com, who tracks these assets. 
However, there are only two ways to purchase these assets: online through TreasuryDirect, limited to $10,000 per calendar year for individuals or using your federal tax refund to buy an extra $5,000 in paper I bonds. There are redemption details for each one here.

You may also buy more I bonds through businesses, trusts or estates. For example, a married couple with separate businesses may each purchase $10,000 per company, plus $10,000 each as individuals, totaling $40,000.

Downsides of I bonds

One of the drawbacks of I bonds is you can’t redeem them for at least one year, said George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts. And if you cash them in within five years, you’ll lose the previous three months of interest. 
“I think it’s decent, but just like anything else, nothing is free,” he said. 
Another possible downside is lower future returns. The variable portion of I bond rates may adjust downward every six months, and you may prefer higher-paying assets elsewhere, Gagliardi said. But there’s only a one-year commitment with a three-month interest penalty if you decide to cash out early.

Still, I bonds may be worth considering for assets beyond your emergency fund, Flis from Resilient Asset Management said.
“I think that the I bond is a wonderful place for people to put the money they don’t need right now,” he said, such as an alternative to a one-year certificate of deposit.
“But I bonds aren’t a replacement for long-term funds,” Flis said. More

Sustainable Energy

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The IEA’s latest update to its Sustainable Recovery Tracker cautions that regional imbalances, compounded by rising commodity prices, are a cause for concern.
Emerging and developing economies, according to the IEA, have made plans for roughly $52 billion of “sustainable recovery spending” before the end of 2023.
It says this is “well short” of what’s required for the pathway to net zero emissions by the middle of this century.

Concerns related to both the energy transition and energy security have been thrown into sharp relief by Russia’s invasion of Ukraine. At the same time, recent months have also seen commodity prices jump.
Marcus Brandt | Picture Alliance | Getty Images

The world’s governments have pledged more than $710 billion to “sustainable recovery measures” by the year 2030 since the beginning of the Covid-19 pandemic, the International Energy Agency has said.
This is a 50% increase compared to the figure in Oct. 2021 and represents “the largest ever clean energy fiscal recovery effort,” according to the IEA.

Despite this growth, the IEA’s latest update to its Sustainable Recovery Tracker cautioned that regional imbalances, compounded by rising commodity prices following the Russia-Ukraine war, were a cause for concern.
In a statement earlier this week, the Paris-based organization said advanced economies were intending to spend over $370 billion before the end of 2023.
It described this as a “level of short-term government spending that would help keep the door open for the IEA’s global pathway to net zero emissions by 2050.”

Read more about clean energy from CNBC Pro

For other parts of the world, however, the story is different. Emerging and developing economies, according to the IEA, have made plans for roughly $52 billion of “sustainable recovery spending” before the end of 2023. It said this was “well short” of what was required for the pathway to net zero emissions by the middle of this century.
“The gap is unlikely to narrow in the near term,” the IEA said, “as governments with already limited fiscal means now face the challenge of maintaining food and fuel affordability for their citizens amid the surge in commodity prices following Russia’s invasion of Ukraine.”

The IEA’s view of what constitutes “clean energy and sustainable recovery measures” is wide-ranging. It includes everything from investments in nuclear, wind, solar photovoltaic and hydro to retrofitting, electric vehicles, transit infrastructure and recycling.
Commodity concerns
Concerns related to both the energy transition and energy security have been thrown into sharp relief by Russia’s invasion of Ukraine.
Russia is a major supplier of oil and gas, and over the past few weeks a number of major economies have laid out plans to reduce their reliance on its hydrocarbons.
At the same time, recent months have also seen commodity prices jump. According to the UN, its Food and Agriculture Organization (FAO) Food Price Index in March averaged 159.3 points, a 12.6% increase compared to February.
In a statement last week, Qu Dongyu, the FAO’s Director-General laid bare the challenges the world was facing. Food prices as measured by the index, he said, had “reached a new all-time high.”
“Particularly, prices for staple foodstuffs such as wheat and vegetable oils have been soaring lately, imposing extraordinary costs on global consumers, particularly the poorest,” Dongyu added, going on to state that the war in Ukraine had “made matters even worse.”
A huge task
According to the UN, for global warming to be kept “to no more than 1.5°C … emissions need to be reduced by 45% by 2030 and reach net zero by 2050.”
The 1.5 figure refers to the Paris Agreement, which aims to limit global warming “to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels” and was adopted in Dec. 2015.
The task is huge and the stakes are high, with the UN noting that 1.5 degrees Celsius is considered to be “the upper limit” when it comes to avoiding the worst consequences from climate change.
“Countries where clean energy is at the heart of recovery plans are keeping alive the possibility of reaching net zero emissions by 2050, but challenging financial and economic conditions have undermined public resources in much of the rest of the world,” Fatih Birol, the IEA’s executive director, said Tuesday.

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Birol added that international cooperation would be “essential to change these clean energy investment trends, especially in emerging and developing economies where the need is greatest.”
While the picture for advanced economies may seem rosier than emerging and developing ones, the IEA pointed to a number of potential issues going forward, stating that “some of the earmarked funds risk not reaching the market within their envisaged timelines.”
Project pipelines, it claimed, had been “clogged” by delays in the establishment of government programs, financial uncertainty, labor shortages and continued supply chain disruptions.
On top of this, “consumer-facing measures” like incentives related to retrofits and electric vehicles were “struggling to reach a wider audience because of issues including red tape and lack of information.”
Looking at the overall picture, the IEA said “public spending on sustainable energy” remained a “small proportion” of the $18.1 trillion in fiscal outflows focused on mitigating the economic effects of the pandemic. More

The current United States tax code allows some of the biggest company names in the country to not pay any federal corporate income tax.
In fact, at least 55 of the largest corporations in America paid no federal corporate income taxes on their 2020 profits, according to the Institute on Taxation and Economic Policy. The companies include names like Whirlpool, FedEx, Nike, HP and Salesforce.

“If a large, very profitable company isn’t paying the federal income tax, then we have a real fairness problem on our hands,” Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy (ITEP), told CNBC.
What’s more, it is entirely legal and within the parameters of the tax code that corporations can end up paying no federal corporate income tax, which costs the U.S. government billions of dollars in lost revenue.
“[There’s] a bucket of corporate tax breaks that are deliberately in the tax code … . And overall, they cost the federal government roughly $180 billion each year. And for comparison, the corporate tax brings in about $370 billion of revenue a year,” Chye-Ching Huang, executive director of the NYU Tax Law Center, told CNBC, citing research from the Tax Foundation.
CNBC reached out to FedEx, Nike, Salesforce and HP for comment. They either declined to provide a statement or did not respond before publication.
The 55 corporations cited by ITEP would have paid a collective total of $8.5 billion. Instead, they received $3.5 billion in tax rebates, collectively draining $12 billion from the U.S. government, according to the institute. The figures don’t include corporations that paid only some but not all of these taxes.

“I think the fundamental issue here is there are two different ways in which corporations book their profits,” Garrett Watson, senior policy analyst at the Tax Foundation, told CNBC. “The amount of profits that corporations may be reporting for financial purposes may be very different from the profits that they are reporting [for tax purposes.]”
Some tax expenditures, which come in many different forms, are used by some companies to take advantage of rules that enable them to lower their effective tax rates.
For example, Gardner’s research into Amazon’s taxes from 2018 to 2021 showed a reported $79 billion of pretax U.S. income. Amazon paid a collective $4 billion in federal corporate income tax in those four years, equating to an effective annual tax rate of 5.1%, according to Gardner’s ITEP report, about a quarter of the federal corporate tax rate of 21%.
Amazon told CNBC in a statement, “In 2021, we reported $2.3 billion in federal income tax expense, $5.2 billion in other federal taxes, and more than $4 billion in state and local taxes of all types. We also collected an additional $22 billion in sales taxes for U.S. states and localities.”
One controversial form of federal tax expenditure is the offshoring of profits. The foreign corporate income tax — anywhere between 0% and 10.5% — can incentivize the shifting of profits to tax havens.
For example, Whirlpool, a U.S. company known for manufacturing home appliances both in the U.S. and Mexico, was cited in a recent case involving both U.S. and Mexican taxes.
“[Whirlpool] did that by having the Mexican operation owned by a Mexican company with no employees, and then having that Mexican company owned by a Luxembourg holding company that had one employee,” Huang told CNBC. “And then it tried to claim that due to the combination of the U.S., Mexico and Luxembourg tax rules … it was trying to take advantage of the disconnect between all of those tax systems to to avoid tax and all of those countries and of court said, no, that goes too far.”
Whirlpool defended its actions in a statement to CNBC: “The case before the Sixth Circuit has never been about trying to avoid U.S. taxes on the profits earned in Mexico. This tax dispute has always been about when those profits are taxed in the U.S. In fact, years before the original Tax Court decision in 2020, Whirlpool had already paid U.S. tax on 100% of the profits it earned in Mexico. Simply put, the IRS thought Whirlpool should have paid those U.S. taxes earlier.”
Watch the video above to learn about how the most profitable companies in the country maneuver through the complicated tax system and what policy solutions may close some loopholes.

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