NerdWallet Study: Top Companies Paid 9% U.S. Tax Rate - NerdWallet

NerdWallet Study: Top Companies Paid 9% U.S. Tax Rate

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.  For more information on the optimal level of oil company taxation, please see the explanatory note by Professor Ben Ho of Vassar College.

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.

  • Did you find this article helpful?
  • yes   no
  • http://www.facebook.com/people/Rick-Stevens/100000737967433 Rick Stevens

    What patriotic companies – supporting our troops at the lowest level they can. But big on wars that other people can fight AND pay for…

    Leona Helmsley: ‘Only little people pay taxes’.

    Hello to you 99%ers ! Hello Suckers.

  • peter

    Kudow and his followers still want lower taxes. The big corps dont want to spend money to be more competitive but just want to hoard. This is the american way. It sucks. Just wait for the next big depression. These are all multinational companies with no loyalty to the united states except to give as much as possible to their lobbys to get their way. There are not enough people hurting yet.

  • D Byte

    The recent IRS estimates of cash or equivalents on hand at corporations = $5.1 Trillion.
    Rather than hire, they prepare for the next recession to buy up their stock or competition cheaper. Bain experience is good for something.

  • Monarch

    What you all fail to understand is that the reason these companies pay so little to the U.S. Treasury, is because they choose to do business overseas where the income is sourced and the taxes payable. What they pay to the U.S. Treasury is not relevant. What is relevant is their effective global income tax rate, which based on the information presented above, is between 18% and 46%. This range of effective rates is, contrary to the theme of this piece, significantly higher than the effective individual income tax rates in the U.S. If the U.S. corporate environment was more friendly, you would see the percentage of taxes paid to the U.S. Treasury go up (even as marginal rates are reduced), and taxes paid to foreign governents go down. Don’t be fooled into thinking these corporations don’t pay income taxes. Examine the publicly available information and discern the results for yourself.

  • eyebeem1

    Wow. Did they break any laws by doing so?

  • The Truth

    Biased and misrepresenting article, as always. Chevron and Exxon income is primarily overseas; taxes are paid to foreign governments. A true representation would show US income versus US taxes; not the global income versus US taxes. Maybe the same for other large corporations.

  • A Person with a Brain

    If Joanna had any brain at all, she could go to Exxon’s public filings and see that Exxon paid a nearly 27% tax rate on US earnings. Too bad she a liberal and she’s too lazy to do any work at all.

  • clarenceswinney

    Percent ;of GDP
    2000–Revenue 20%–Spending 18%=Surplus
    2009————–15%—————-25%=$1400 Deficit
    In that Time Frame
    Revenue declined 30% and Spend increased 33%=Borrowed $6000B
    Revenue is important!

  • Chiron202

    Since they are are hoarding trillions of dollars, not hiring anyone, and paying only a few percent of their profits to the United States, why not just leave and be done with it? If this is such a lousy country to do business in, then get the hell out.
    I bet I’m not the only one getting sick of hearing poor billionaires whine about their tax problems.

  • mtthwbrnd

    9% of a lot is better than 60% of a little. Why does the government require so much money to “govern” the country anyway?

  • John

    Correct me if I’m wrong, but it seems that after clicking on the “many reasons” link, that many of the reasons why companies pay substantially lower than the 35%statutory tax rate are actually just tax loopholes. This negates the argument that “well, if we just lowered the tax rate, they would pay would pay the full tax rate,” because if these loopholes still exist, then these large corporations will never pay the 35% (or whatever it is changed too). If you’re a corporation, and you’re allowed all of these loopholes that substantially reduces the amount you pay in taxes, why would the statutory tax rate even matter? If we really want to fix the problem, get rid of the loopholes, so that corporations REALLY do pay the statutory rate.

  • http://www.facebook.com/profile.php?id=100000656811809 Darryl Crouch

    If you look at the taxes they are paying in other countries, and in many cases much more, they are helping to build those countries infrastructure, military, welfare, schools, etc, but they don’t to pay for them here. It’s there choice to pay the taxes where they please, but they should have the decency to stop lobbying politicians to proclaim the US has the highest tax rate when in fact, they have many loopholes and deductions that they use to keep from paying those taxes.