S&P 100 Tax Rate Report

by John S Kiernan

Wallet Hub 2014 Highest and Lowest S&P 100 Tax RatesThe United States has in recent years been grappling with both its political and economic identities.  Tax reform, naturally, has proven to be one of most hotly contested policy battlegrounds, with a confluence of contradictory agendas – partisan, industrial and theoretical in nature – muddying the waters.  In the process, the role of the large multi-national corporation as a tax-paying entity has come under intense scrutiny.

With memories of corporate greed and Great Recession bailouts still fresh in the minds of taxpayers, the myriad “revelations” about corporate accounting practices that have emerged from inspection of quarterly financials have fueled indignation as well as confusion among us little guys who feel as if we might be getting the short end of the stick.

This all, of course, begs a number of very important questions – from how much large corporations really pay in taxes and how easy those numbers are to distort all the way to what the ultimate taxpayer hierarchy should be between consumers and corporations.

WalletHub attempted to shed some light on those issues by analyzing annual reports for the S&P 100 – the largest and most established companies on the stock market.  We compiled 2012 data on company profits, withholding practices and tax payments on the state, federal and international levels in order to determine effective and deferred tax rates for each business.You can read more about our methodology as well as review our complete findings below.

Main Findings

 

Note: For visual purposes, we excluded the companies with the 5 highest and lowest effective tax rates.

  • S&P 100 companies pay roughly 30% lower rates on international taxes than U.S. taxes.
  • Tech companies – including Apple, EBay and Google – seem to specialize in paying up to 80% lower rates abroad.
  • Six S&P 100 companies are actually paying a negative overall tax rate and are therefore due a tax refund:  Abbott Laboratories, Morgan Stanley, Bank of America, AIG, Bristol-Myers and Verizon.
  • Among the remaining companies that owe taxes, Citi, VISA, AbbVie, and MetLife pay the lowest rates.
  • The average S&P 100 company pays a 14% higher tax rate than the top 3% of consumers.

 

Company Name Stock Symbol 2012 Overall Tax Rate 2012 State Tax Rate 2012 Federal Tax Rate 2012 International Tax Rate
Average N/A 26.9% 3.1% 29.2% 23.1%
Citigroup C 0.1% neg income neg income 32.4%
Visa V 2.9% -24.3% 9.7% 18.3%
AbbVie ABBV 7.9% N/A N/A 5.2%
Metlife MET 8.9% neg income neg income 13.5%
Texas Instruments TXN 9.1% -0.6% -13.5% 13.7%
Mondelez International MDLZ 9.5% neg income neg income 19.1%
Amgen AMGN 13.3% 0.2% 30.5% 4.2%
General Electric GE 13.6% N/A 3.3% 23.1%
eBay EBAY 15.4% 6.4% 59.7% 3.0%
UPS UPS 17.1% -4.9% 7.8% 26.4%
Medtronic MDT 17.6% N/A N/A 8.1%
Google GOOG 19.4% 2.9% 37.9% 5.3%
Baxter BAX 19.5% -6.7% 60.6% 14.2%
QUALCOMM QCOM 19.5% -0.4% 9.9% 31.1%
Pfizer PFE 19.8% neg income neg income 16.4%
DuPont DD 19.9% -4.7% 2.5% 25.7%
Cisco CSCO 20.8% 2.0% 48.4% 7.0%
Oracle ORCL 23.0% 4.3% 29.9% 12.5%
Coca-Cola KO 23.1% 3.0% 43.6% 13.0%
The Bank of New York Mellon BK 23.6% 5.2% 20.4% 20.5%
Johnson & Johnson JNJ 23.7% N/A N/A 14.9%
Microsoft MSFT 23.8% 9.6% 139.7% N/A
EMC EMC 24.1% 3.3% 37.5% 7.6%
IBM IBM 24.2% 4.4% 18.2% 25.4%
Honeywell HON 24.4% 1.6% 31.5% 17.0%
Lilly Eli & Co LLY 24.4% 2.2% 23.4% N/A
Schlumberger SLB 24.4% 2.3% 29.9% 21.0%
Twenty-First Century Fox FOXA 24.5% N/A N/A N/A
United Technologies UTX 24.8% 4.6% 28.4% 19.8%
NIKE NKE 25.0% 7.0% 30.0% 20.7%
Apple AAPL 25.2% 5.6% 64.6% 1.9%
PepsiCo PEP 25.2% 5.6% 32.9% 16.7%
Capital One COF 25.8% 1.5% 24.7% 20.9%
Intel INTC 26.0% N/A 26.6% N/A
JP Morgan Chase JPM 26.4% 2.9% 21.9% 36.2%
Procter & Gamble PG 27.1% N/A 26.3% N/A
Freeport McMoRan Copper & Gold FCX 27.5% 1.6% 21.1% 34.6%
Accenture ACN 27.6% 5.9% 37.3% 23.9%
AT&T T 27.8% N/A 25.9% N/A
Merck & Co MRK 27.9% 0.4% 46.6% 7.7%
Gilead Sciences GILD 28.8% 1.3% 35.9% 3.0%
Ford Motor F 28.8% -2.5% 31.3% 29.2%
US Bancorp USB 28.9% 4.4% 24.6% N/A
3M Co MMM 29.0% 2.9% 25.5% 29.4%
National Oilwell Varco NOV 29.2% 2.6% 30.3% 25.1%
Philip Morris International PM 29.5% N/A N/A 28.2%
Mastercard MA 29.8% 1.2% 30.8% 26.0%
Monsanto MON 30.2% 3.3% 28.3% 27.5%
Allstate ALL 30.2% N/A N/A N/A
American Express AXP 30.5% 3.5% 20.7% neg income
Caterpillar CAT 30.7% 1.6% 31.9% 28.0%
Wal-Mart Stores WMT 31.0% 3.2% 29.2% 26.9%
Berkshire Hathaway BRK.B 31.1% N/A N/A N/A
Anadarko Petroleum APC 31.4% 106.1% 11.4% 28.1%
Raytheon RTN 31.6% N/A 31.4% 34.2%
Wells Fargo WFC 32.0% 3.8% 29.4% 6.2%
Colgate-Palmolive CL 32.1% N/A N/A N/A
Comcast CMCSA 32.3% 3.5% 28.3% 43.3%
Halliburton HAL 32.3% 2.1% 30.5% 31.4%
McDonald's MCD 32.4% 6.8% 44.3% 22.0%
American Electric Power AEP 32.4% -2.3% 34.6% N/A
Lockheed Martin LMT 32.6% N/A N/A N/A
Starbucks SBUX 32.8% 4.7% 30.7% 21.1%
Goldman Sachs Group GS 33.3% 9.6% 34.1% 15.7%
Walt Disney DIS 33.3% 2.8% 30.1% 36.5%
Dow Chemical DOW 33.9% neg income neg income 30.8%
Boeing BA 34.0% 1.8% 33.0% 14.8%
Time Warner TWX 34.3% 2.3% 23.8% 12066.7%
Exelon EXC 34.9% N/A N/A N/A
Target TGT 34.9% 3.0% 32.4% neg income
Emerson Electric EMR 35.0% 3.3% 35.6% 30.1%
FedEx FDX 35.3% 3.6% 29.7% 50.6%
Altria Group MO 35.4% 5.2% 30.2% 31.3%
Southern SO 35.6% 3.9% 31.7% N/A
Unitedhealth Group UNH 35.9% N/A N/A N/A
Costco Wholesale COST 36.1% 5.6% 33.3% 30.8%
Norfolk Southern NSC 36.6% 3.7% 32.9% N/A
Walgreen WAG 37.0% N/A N/A N/A
Home Depot HD 37.2% 4.5% 32.6% 38.4%
Union Pacific UNP 37.5% 4.3% 33.2% N/A
Lowe's Cos LOW 37.6% 4.6% 31.9% neg income
CVS Caremark CVS 38.6% 6.2% 32.4% N/A
Exxon Mobil XOM 39.4% N/A 25.7% 40.7%
Occidental Petroleum OXY 40.2% 2.3% 30.5% 43.0%
Chevron CVX 43.2% 6.0% 28.1% 45.2%
ConocoPhillips COP 51.5% 6.3% 16.9% 61.6%
Apache APA 59.0% 0.6% 27.8% 74.0%
Amazon.com AMZN 78.7% N/A N/A neg income
Facebook FB 89.3% 3.7% 36.4% neg income
General Dynamics GD 161.4% -1.9% 98.0% neg income
Abbott Laboratories ABT -89.8% neg income neg income 17.5%
Morgan Stanley MS -45.6% neg income neg income 34.8%
Bank of America BAC -36.3% 28.8% -159.3% 109.7%
AIG AIG -27.9% neg income neg income 5.4%
Bristol-Myers Squibb BMY -6.9% neg income neg income 14.4%
Verizon Communications VZ -6.7% -3.1% -3.6% -6.0%
Devon Energy DVN neg income neg income neg income neg income
General Motors GM neg income neg income neg income neg income
Hewlett-Packard HPQ neg income neg income neg income neg income
Simon Property Group SPG Tax free REIT Tax free REIT Tax free REIT Tax free REIT

*Averages reflect rates for S&P 100 companies, minus those with negative income before income taxes, those without data available, and the five highest/lowest rates in each category.
WalletHub Corporate Tax Rates

Average Federal Income Tax Rate By Entity Type

Ask The Experts: Should Corporations Pay Less Than Consumers?

It’s clear that we have an immense societal interest in knowing what corporate America pays Uncle Sam in taxes – but to what end?

Are we checking to make sure large companies aren’t using their intellect and influence to avoid paying their fair share, to the detriment of the economy?  Or do we just want to lament exactly how much bigger of a burden we little guys are shouldering compared to the millionaires that occupy the country’s board rooms?

Such questions certainly bear asking, as they speak to consumer sentiment in this post-recession, post-bailout environment where trust is tough to come by and tax reform is constantly being called for.  We therefore turned to a distinguished group of tax policy experts for insight into the current corporate tax code and suggestions for improving it moving forward.  You can check out their commentary below.

Is the U.S. leaving money on the table with the current corporate tax structure?

President Reagan once said, 'I’ll probably kick myself for having said this, but when are we going to have the courage to point out that in out tax structure, the corporation tax is very hard to justify?' Among others, one can give a justification that our personal income tax system might fail without it. In fact, issues in corporate taxation must be dealt with in conjunction with personal income taxes. But the President was right in that the structure of the U. S. corporate tax system leaves room for improvement both in light of efficiency and equity principles.

For example, we have patched the problem of double taxation between different types of investors. And, while the U. S. statutory tax rates are high, many corporations have found ways to hoard cash abroad to avoid tax obligations. Our corporate tax system needs to be streamlined with possibly lowering the statutory rates, installing permanent fixes for double taxation, better handling the 'tax haven' abuse by multinational corporations, and so on.

- Kwang Soo Cheong, The Johns Hopkins Carey Business School


I don't look at the government 'leaving money on the table,' as the current corporate rate is the highest in the developed world. While other countries have moved their corporate rates down, we have gone in the opposite direction.

We are, however, 'leaving money on the table' in another way, as we discourage other international corporations from setting up in the US due to an unattractive tax structure. We are the opposite of the Celtic Tiger, which has attracted many corporations to Ireland which then added many jobs (high-end jobs). We also encourage U.S. firms to move operations off shore to achieve a more effective tax rate by maintaining this high tax rate.
Net/net: YES, we are leaving quite a bit of POTENTIAL tax funds on the table via these actions.

- Charles Kane, MIT Sloan School of Management


Yes. Corporations are extremely adept at tax planning around the current tax rules. One common area is for large U.S. multinational corporations to hide income overseas through creative transfer pricing techniques. Just look at the low effective tax rates for companies like Google and Apple.

Ira S. Weiss, University of Chicago Booth School of Business


High taxes on repatriation keeps assets abroad, lowering potential growth at home. Double tax on dividends becomes ever more dangerous as rates go up.

- Richard A. Epstein, New York University School of Law


What would you change about the way U.S. corporations are taxed?

Lower the effective tax rate to compete with the remainder of the developed world. As important, allow a one-time amnesty on U.S. companies to move cash back into the U.S. without a related dividend tax IF the funds are used to create more jobs in the U.S. This can be monitored if objective measures are implemented.

- Charles Kane, MIT Sloan School of Management


There is greater than a trillion dollars offshore with U.S. companies that cannot repatriate without a severe dividend tax. We are creating jobs offshore by leaving this cash offshore. It is absolutely irresponsible to not adjust this inequity in the global markets in order to help our economy in so many quantifiable ways.

I would tighten up the tax rules for international taxation for U.S. companies. Currently, companies are often able to find creative ways to defer U.S. taxation indefinitely on much of their income. Companies are often able to do this using creative ways of transferring income from their U.S. entities to U.S. owned entities overseas.

- Ira S. Weiss, University of Chicago Booth School of Business


I would lower rates in general, and exempt from retained earnings money distributed as dividends – surely for people who pay taxes, and probably for exempt organizations and pension funds as well.

- Richard A. Epstein, New York University School of Law


The recommendation I would make (as bold as it may be) is to move to a territorial system, like the rest of the world. That would greatly simplify the tax code, eliminate distortionary behavior and result in a more fair system.

Of course, if I had my choice, I’d eliminate corporate taxation altogether. Some people seem to think that we need corporate taxation in order to tax the ‘rich.’ However, corporations are not people. The largest shareholders of many corporations are public pension plans. So, by taxing corporations we are basically levying taxes on public servants, employees, and customers. If the government wants to tax the ‘rich,’ it should do so at the individual level.

- Justin J. Hopkins, University of Virginia Darden School of Business


I would reform the international corporate tax regime to discourage corporations from parking profits offshore. With the growing importance of intangibles and things like cloud computing, the ability to defer tax on worldwide income is a major problem (see, e.g., Apple, Google, etc.).

- Scott Schumacher, University of Washington School of Law


I would adopt broad corporate tax transparency rules for public companies so that we can know whether and when companies pay their fair share of taxes.

- Allison Christians, McGill University


To improve the long-term growth prospects of the economy I would replace the corporate income tax with an environmental tax. Eliminating the corporate income tax will decrease significant distortions in the corporate sector, such as an incentive to increase leverage and to avoid taxes by shifting operations to lower-tax foreign jurisdictions. Introducing an environmental tax will enable the government to raise revenues while maintaining environmental objectives. These tax reforms would support sustainable economic growth

- Clemens Sialm, University of Texas


How should consumer and corporate tax rates compare?

Consumer tax rates should closely mirror buying benefits. In other words, do not do a 'blanket' tax structure, but rather a tax on buying behavior so that benefits are taxed accordingly. This is a fair way to assess taxes to those who can more readily pay as they choose to purchase high-end products, etc. These are typically 'inelastic' purchases which taxes will not impact to a large degree. And obviously, those who have little will not be taxed across the board as they would purchase at a lower level.

On the corporate side, the idea is to create an environment of investment so that an acceleration of taxable income is created when the tax environment is more friendly. Eliminate the loopholes which are a byproduct of a high tax structure and push to increase the velocity of taxable revenues through growth in the corporate results.

- Charles Kane, MIT Sloan School of Management


I would keep both of these flat, broad and low. I would eliminate special taxes e.g. excise taxes on dividends and capital gains. A simple tax structure with one instrument is begetter than a bunch of taxes all of which get in the way of each other.

- Richard A. Epstein, New York University School of Law

Methodology

Corporate income tax rates are obfuscated by an array of accounting techniques, business models, regulatory circumstances and organizational footprints.  Not only would taking all such specific circumstantial information into account prove overly burdensome, it would likely serve only to distract once again.

We therefore tried to approach the issue of evaluating corporate tax burdens as simply and uniformly as possible.  Using data from each company’s 2012 annual report, we identified each organization’s revenues, tax payments, and deferral amounts on the state, federal and international levels, and, in so doing, determined their effective tax rates in each jurisdiction.

We were then able to analyze the data in a variety of manners, using key indicators to gauge correlation patterns and identify potentially significant comparisons and contradictions.

In the interest of simplicity, we only considered companies for inclusion in the “highest & lowest” subrankings above if they were actually profitable.  Including companies that weren't profitable in a certain jurisdiction, for example, would lead to distortionary outliers whose supporting dynamics may no longer be in effect in the years to come.

For similar reasons, when calculating averages we also excluded the five companies with the highest and lowest rates in each category.

 

Sources: The data used to compile this report is courtesy of the Internal Revenue Service, Quantria Strategies, Yahoo Finance and corporate annual reports.

Author
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John Kiernan is Senior Writer & Editor at Evolution Finance. He graduated from the University of Maryland with a BA in Journalism, a minor in Sport Commerce & Culture,…
1181 Wallet Points
Considering deferral amounts as "paid taxes" as your calculations appear to do is ridiculous. These deferral amounts never have to paid under the current tax schemes, so considering them as part of taxes paid and contributing to a higher effective tax rate for companies that have deferred taxes due on billions of dollars of worldwide income distorts your effective tax rates to an absurd degree. As a US citizen I cannot defer indefinitely taxes due on world wide income, there
is no earthly reason corporations should be able to either. It's simply a bought and paid for loophole. To allow this deferral of taxes due on worldwide income simply rewards "3 card monte" accounting by multinational corporations where they make it appear they are producing overseas and exporting back to the US products and services in order to defer taxes due (the big tech companies like APPLE are notorious for this). The US is still the biggest market in the world, and multinationals continue to benefit from participation in this biggest market in the world regardless if they actually produce and sell here or virtually produce overseas and sell here. This tax deferral has to be ended. The tax bill owed to the US treasury by multinational corporations needs to be collected.
Apr 29, 2014  •  Reply  •  Flag