Study says 10 largest corporations in America paid average of 9% in taxes last year

[Dusty Bake Activate]

A recent NerdWallet study found that the top ten most profitable American companies paid an average of 9% of their pre-tax earnings in taxes to the U.S. federal government last year. These same companies reported an average tax provision of 32%.

This information is available for 500 of America’s largest companies in the NerdWallet Tax Rate Transparency Tool.

Tax provision is the accounting metric for amount of taxes a company owes to all taxing entities, domestic and foreign. It includes both taxes that will be paid in the current year and taxes that have been deferred to be paid later.

Because tax provision includes both domestic and foreign, current and deferred taxes, NerdWallet researched further to find how much was actually paid by these American companies to the U.S. federal government in the most recent tax year. By dividing the current portion of federal taxes by pre-tax income, NerdWallet was able to calculate the percentage of these companies’ earnings that was paid to the U.S. government. For the ten American companies with highest earnings in the most recent fiscal year, this number averaged 9%.

There are many reasons a company can legally pay less than the statutory tax rate of 35%, including timing differences between accounting and tax codes and by earning and recognizing a portion of their earnings in foreign countries with lower tax rates. For example, Exxon Mobil conducts the majority of its business outside the U.S. and paid $28.8 billion in taxes to foreign governments, but only owed and paid $1.5 billion to the U.S. government. There is nothing illegal or wrong about this. NerdWallet’s mission is to bring transparency to financial markets so this data is presented to provide easy access to interesting information, not to pass judgment.

Many believe that the current statutory tax rate of 35% is too high, including both presidential candidates. The fact that many large American companies pay the majority of their taxes to foreign governments has been cited as evidence that the rate is too high. Some believe that if corporate tax rates were lowered, American companies would recognize more of their profits domestically and have the net effect of increasing tax revenues.

Below are the ten most profitable U.S. companies with their taxes for last year, both total provision and payments to the U.S. government. NerdWallet has also created a corporate tax rate tool with this information for 500 American companies.
#1 Exxon Mobil (XOM)

Pre-tax earnings: $73.3 Billion

Tax Provision: $31.1 Billion (42%)

Actual Taxes Paid to U.S. federal government: $1.5 billion (2%)

Exxon paid $1.5 billion to the U.S. federal government in 2011 and deferred paying an additional $1.6 billion. It paid the majority of its taxes to foreign governments where it operates ($28.8 billion).

#2 Chevron (CVX)

Pre-tax earnings: $47.6 Billion

Tax Provision: $20.6 Billion (43%)

Actual Taxes Paid to U.S. federal government: $1.9 Billion (4%)

Chevron paid $1.9 billion to the U.S. federal government in 2011 and deferred paying an additional $877 million. It paid the majority of its taxes to foreign governments where it operates ($16.5 billion). Chevron also paid $596 million to state and local government.


#3 Apple (AAPL)

Pre-tax earnings: $34.2 Billion

Tax Provision: $8.3 Billion (24%)

Actual Taxes Paid to U.S. federal government: $3.9 Billion (11%)

Apple paid $3.9 billion to the U.S. federal government in 2011 and deferred paying an additional $3.0 billion. It paid $762 million to state and local government, $769 million to foreign governments.


#4 Microsoft (MSFT)

Pre-tax earnings: $28.1 Billion

Tax Provision: $4.9 Billion (18%)

Actual Taxes Paid to U.S. federal government: $3.1 Billion (11%)

Microsoft paid $3.1 billion to the U.S. federal government in 2011. It paid $209 million to state and local government, $1.6 billion to foreign governments.


#5 JPMorgan Chase & Co (JPM)

Pre-tax earnings: $26.7 Billion

Tax Provision: $7.8 Billion (29%)

Actual Taxes Paid to U.S. federal government: $3.7 Billion (14%)

JPMorgan paid $3.7 billion to the U.S. federal government in 2011 and deferred paying an additional $2.1 billion. It paid $1.2 billion to state and local government, $1.2 billion to foreign governments.


#6 Wal-Mart (WMT)

Pre-tax earnings: $24.4 Billion

Tax Provision: $7.9 Billion (33%)

Actual Taxes Paid to U.S. federal government: $4.6 Billion (19%)

Wal-Mart paid $4.6 billion to the U.S. federal government in 2011 and deferred paying an additional $1.4 billion. It paid $743 million to state and local government, $1.4 billion to foreign governments.


#7 Wells Fargo & Co (WFC)

Pre-tax earnings: $23.7 Billion

Tax Provision: $7.4 Billion (31%)

Actual Taxes Paid to U.S. federal government: $3.4 Billion (14%)

Wells Fargo paid $3.4 billion to the U.S. federal government in 2011 and deferred paying an additional $3.1 billion. It paid $468 million to state and local government, $52 million to foreign governments.


#8 ConocoPhillips (COP)

Pre-tax earnings: $23.0 Billion

Tax Provision: $10.5 Billion (46%)

Actual Taxes Paid to U.S. federal government: $1.9 Billion (8%)

ConocoPhillips paid $1.9 billion to the U.S. federal government in 2011 and deferred paying an additional $943 million. It paid $413 million to state and local government, $7.1 billion to foreign governments.


#9 International Business Machines (IBM)

Pre-tax earnings: $21.0 Billion

Tax Provision: $5.1 Billion (25%)

Actual Taxes Paid to U.S. federal government: $0.268 Billion (1%)

IBM paid $268 million to the U.S. federal government in 2011 and deferred paying an additional $909 million. It paid $429 million to state and local government, $3.2 billion to foreign governments.


#10 General Electric (GE)

Pre-tax earnings: $20.1 Billion

Tax Provision: $5.7 Billion (29%)

Actual Taxes Paid to U.S. federal government: $1.0 Billion (5%)

GE paid $1.0 billion to the U.S. federal government in 2011 and deferred paying an additional $1.5 billion. It paid $4.7 billion to foreign governments.

 

[Jello Biafra]

The tax code in this country is a disaster and that should be the only topic of conversation in his election in regards to taxes. But no one in Washington really wants to do jack shyt about fixing the tax code becuase that would actually rtequire doing some hard work. Its much easier to make a big deal out of a billionaire like Romney taking advantage of existing tax loopholes or pointing out that the majority of poor don't pay any income taxes because both of things fire up their respective political bases.

 

[bnew]

Robert Reich (@rbreich@masto.ai)

Reminder: Many of the same corporations putting out July 4th tweets today also pay nothing in federal income taxes.

masto.ai

https://archive.is/5k1rl

 

[Controversy]

Conservatives are keen on extending and expanding corporate tax breaks bc it spurs growth & innovation

Yet, the last time we had a surplus, Clinton needed to raise the corp tax rate to 35%

The current corp tax rate is 21%

If corporations paid their fair share, we wouldn't have such a huge deficit...common sense

 

[Professor Emeritus]

"The fact that many large American companies pay the majority of their taxes to foreign governments has been cited as evidence that the rate is too high. Some believe that if corporate tax rates were lowered, American companies would recognize more of their profits domestically and have the net effect of increasing tax revenues."



Such a stupid argument. Okay, so you lower taxes in order to attract the company back to pay its taxes here. So then the company tells the other country to lower its taxes, or shops for a new country with lower taxes, until they find someone who beats the American rates. So the USA lowers again, to match again.....eventually you get to the point where someone offers them straight 0% tax rate so long as they source a few more offices in their country because "jobs".

So long as paying corporate taxes is effectively voluntary, of course this will happen. Stop the bullshyt and FORCE them to pay taxes here.