When people have a bad financial year, they generally don’t get any tax benefit. But when corporations lose money, the losses don’t disappear. For tax purposes, they are carried forward to future years, and can result in companies making billions but still owing nothing.
Case in point: Delta Airlines, which, as Bloomberg Business Week explains, won’t owe anything on its $2.7 billion in earnings last year.
Delta isn’t doing anything special here–the ability to carry forward corporate losses is an ordinary and well-established feature of the tax code. And indeed, in some cases an individual taxpayer could have such a bad year that he would have a loss that could carry forward to another year.
Mitt Romney famously said on the campaign trail that corporations are people. What he didn’t explain is that they’re people who sometimes have better tax benefits than actual people.