S&P 100 Tax Rate Report
The 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.
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|
|Citigroup||C||0.1%||neg income||neg income||32.4%|
|Metlife||MET||8.9%||neg income||neg income||13.5%|
|Mondelez International||MDLZ||9.5%||neg income||neg income||19.1%|
|Pfizer||PFE||19.8%||neg income||neg income||16.4%|
|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%|
|Lilly Eli & Co||LLY||24.4%||2.2%||23.4%||N/A|
|Twenty-First Century Fox||FOXA||24.5%||N/A||N/A||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%|
|Merck & Co||MRK||27.9%||0.4%||46.6%||7.7%|
|National Oilwell Varco||NOV||29.2%||2.6%||30.3%||25.1%|
|Philip Morris International||PM||29.5%||N/A||N/A||28.2%|
|American Express||AXP||30.5%||3.5%||20.7%||neg income|
|American Electric Power||AEP||32.4%||-2.3%||34.6%||N/A|
|Goldman Sachs Group||GS||33.3%||9.6%||34.1%||15.7%|
|Dow Chemical||DOW||33.9%||neg income||neg income||30.8%|
|Lowe's Cos||LOW||37.6%||4.6%||31.9%||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%|
|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.
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?
- What would you change about the way U.S. corporations are taxed?
- How should consumer and corporate tax rates compare?
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.