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Companies That Pay Less Taxes Than You

What Corporate Taxes?


For much of this year, legislators inside the beltway have been debating whether to lower the corporate tax rate, which currently can be as high as 35% for the biggest corporations in America. Some argue higher rates are a deterrent to companies doing business in the U.S., thereby costing us jobs, while others worry that lower rates mean losing much-needed federal revenue. But a new report may give pause to both sides.

Citizens for Tax Justice, a nonprofit advocacy group, analyzed publicly available 2008-2010 federal tax filings for 12 leading Fortune 500 companies spanning the energy, technology and banking sectors and found that none of them incurred tax rates anywhere near the 35% mark. In fact, very few of the companies owed any taxes at all.

These 12 companies reported more than $170 billion in pretax profits, and had they been kept to the 35% tax rate they would have owed the U.S. government $59.9 billion in taxes. Instead, the report notes, these companies collectively came out ahead by $2.5 billion thanks to a number of corporate tax subsidies. So if anything, the researchers argue, the problem is not too heavy tax burdens for major corporations, but too little.

MainStreet combed through the data and ranked these 12 companies by the percentage of profits they paid in taxes between 2008 and 2010. In each case, the tax rates of these major corporations are significantly less than that of most U.S. households.

Photo Credit: Chad Miller

12th Lowest Tax Rate: Exxon Mobil


U.S. Pre-Tax Profit 2008-2010: $19.66 billion

Total Federal Taxes Paid 2008-2010: $2.78 billion

Effective 3-Year Federal Tax Rate: 14.2%

Exxon may be the world’s largest oil company, but between 2008 and 2010, it enjoyed an overall federal tax rate of less than half the highest amount big corporations can be taxed. To put this into perspective, Exxon pays a tax rate comparable to the rate a single taxpayer would have been asked to pay in 2010 if he or she earned just over $8,000 a year.

Photo Credit: futureatlas.com

11th Lowest Tax Rate: United Technologies


U.S. Pre-Tax Profit 2008-2010: $7.94 billion

Total Federal Taxes Paid 2008-2010: $791 million

Effective 3-Year Federal Tax Rate: 10%

Though this aerospace company had an average federal tax rate of 10% for its past three returns, the company’s tax burden has been on a downward trend. In 2009, United paid 7.8% of its revenue [should be profits right?] in federal taxes, and in 2010 that number dropped to just 1.7%.

Photo Credit: UTC.com

10th Lowest Tax Rate: Yahoo


U.S. Pre-Tax Profit 2008-2010: $1.66 billion

Total Federal Taxes Paid 2008-2010: $145 million

Effective 3-Year Federal Tax Rate: 8.7%

In general, Yahoo’s tax rate was closer to the theoretical corporate tax ceiling than most of the companies on this list – hovering around 28% in both 2008 and 2009. That average was skewed by the company’s 2010 tax return, in which it received more than $80 million in tax benefits, giving the company a federal tax rate of -9.6% for the year.

Photo Credit: PalLoberg

9th Lowest Tax Rate: IBM


U.S. Pre-Tax Profit 2008-2010: $26.47 billion

Total Federal Taxes Paid 2008-2010: $1 billion

Effective 3-Year Federal Tax Rate: 3.8%

For a company whose pre-tax profits were in excess of $8 billion each of the three years reported here, IBM’s tax rate is consistently low, never exceeding 5% in any given year.

Photo Credit: kansir

8th Lowest Tax Rate: Honeywell International


U.S. Pre-Tax Profit 2008-2010: $4.9 billion

Total Federal Taxes Paid 2008-2010: -$34 million

Effective 3-Year Federal Tax Rate: -0.7%

Not only did Honeywell not owe any federal taxes for the period between 2008 and 2010, but the technology company actually came out ahead on its federal returns during this time, receiving some $23 million back in tax benefits.

Photo Credit: Honeywell.com

7th Lowest Tax Rate: FedEx


U.S. Pre-Tax Profit 2008-2010: $3.02 billion

Total Federal Taxes Paid 2008-2010: -$23 million

Effective 3-Year Federal Tax Rate: -0.8%

While the U.S. Post Office has been bleeding money, FedEx has raked in a total pre-tax profit of more than $3 billion during the past three years, and received tens of millions of dollars on top of that in federal tax benefits.

Photo Credit: brosner

6th Lowest Tax Rate: Wells Fargo


U.S. Pre-Tax Profit 2008-2010: $49.3 billion

Total Federal Taxes Paid 2008-2010: -$681 million

Effective 3-Year Federal Tax Rate: -1.4%

We’re not sure what’s more troublesome here: the fact that Wells Fargo has effectively avoided paying federal taxes for the past three years, or the fact the company had a whopping pre-tax profit of nearly $50 billion, the most of any company on the list. After all, the company has nonetheless seen the need to cut back on customer reward programs to save money.

Photo Credit: TheTruthAbout

5th Lowest Tax Rate: Boeing


U.S. Pre-Tax Profit 2008-2010: $9.7 billion

Total Federal Taxes Paid 2008-2010: -$178 million

Effective 3-Year Federal Tax Rate: -1.8%

When it comes to tax returns, Boeing beat the federal government 3-0. The company did not owe federal taxes in any of the three years covered in this report.

Photo Credit: smaedi

4th Lowest Tax Rate: Verizon Communications


U.S. Pre-Tax Profit 2008-2010: $32.52 billion

Total Federal Taxes Paid 2008-2010: -$951 million

Effective 3-Year Federal Tax Rate: -2.9%

Verizon has enjoyed an unusual tax formula in recent years: the more the company makes, the less it pays in taxes. In 2008, the company’s pre-tax profit was $8.3 billion, and it forked over a modest $365 million of that to the federal government. Yet when the company’s profit shot up to roughly $12 billion in each of the two following years, the company ended up receiving $611 million in tax benefits in 2009 and $705 million in tax benefits in 2010. Not too shabby.

Photo Credit: Verizon Wireless

3rd Lowest Tax Rate: Dupont


U.S. Pre-Tax Profit 2008-2010: $2.12 billion

Total Federal Taxes Paid 2008-2010: -$72 million

Effective 3-Year Federal Tax Rate: -3.4%

Dupont is known for finding innovative scientific solutions to everyday problems, but apparently the company is getting pretty good at accounting as well. Dupont had to pay out a modest amount in federal taxes for 2008 and 2009 but in 2010, the company enjoyed credits that gave it a tax rate of -11.5%.

Photo Credit: Dupont.com

2nd Lowest Tax Rate: American Electric Power


U.S. Pre-Tax Profit 2008-2010: $5.89 billion

Total Federal Taxes Paid 2008-2010: -$545 million

Effective 3-Year Federal Tax Rate: -9.3%

The power company that supplies electricity to much of the southern U.S. likely fared much better on its tax returns than many of its customers did. With 2009’s tax return, in particular, the company ended up with a federal tax profit of $575 million, equivalent to a federal tax rate of -28.6%.

Photo Credit: ColumbusCameraOp

The Lowest Tax Rate: General Electric


U.S. Pre-Tax Profit 2008-2010: $7.72 billion

Total Federal Taxes Paid 2008-2010: -$4.73 billion

Effective 3-Year Federal Tax Rate: -61.3%

Most households would probably love to see their tax returns substituted with those of General Electric. During the past three years, the company has managed the lowest federal tax rate of any corporation, snagging nearly $5 billion in net tax benefits from the government in the process.

In fact, G.E. only seems to be getting better at the tax game, as 2010 proved to be its best year of the three. In this one year, the company had a federal tax profit of more than $3 billion. So remember, if you ever run into a GE executive at a bar, be sure to ask them to pick up your tab, and everyone else’s too. They’ll probably just write the whole thing off as a business expense anyway.Photo Credit: postdif

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