Which Company Faces a 3,000 Percent Tax Rate?

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A new analysis shows corporate tax rates can vary wildly from company to company -- from negative rates to nearly 3,000 percent.

Major corporations are known to find ways to pay lower income tax rates than individuals, but a new analysis shows corporate tax rates can vary wildly from company to company.

That’s the case even among the companies that comprise the stock market’s S&P 100 Index, according to a report released by WalletHub today.

WalletHub’s analysis of corporate annual reports shows that the average S&P 100 company had an overall tax rate of 28.4 percent last year, which is essentially unchanged from 2013.

At one end of the spectrum — which is dominated by energy corporations — Anadarko Petroleum had an overall tax rate of a whopping 2,994.4 percent.

Why was Anadarko Petroleum’s rate so high? According to WalletHub analyst Jill Gonzalez:

The tax rate is calculated as the ratio between the income before taxes and the amount paid as income taxes. A company can pay such a high tax ratio because of exceptional events (i.e., some deferred income tax payments have become due in the current fiscal year).

Gonzalez says Anadarko Petroleum had a series of unrecognized tax benefits in 2014. These are amounts for which the company believes that it should not pay tax, but for which authorities have not yet made a judgement. 

“Thus, the company needed to calculate income tax also for those amounts,” Gonzalez says.

The rest of the companies in the top 10 had overall tax rates ranging from 109.3 percent (Occidental Petroleum) down to 38.1 percent (Chevron).

Those top 10 companies are:

  • Anadarko Petroleum (2,994.4 percent)
  • Occidental Petroleum (109.3 percent)
  • Devon Energy (58.3 percent)
  • Citigroup (47.8 percent)
  • Walgreen Boots Alliance (42.9 percent)
  • UnitedHealth Group (41.8 percent)
  • Facebook (40.1 percent)
  • CVS Caremark (39.5 percent)
  • ConocoPhillips (38.2 percent)
  • Chevron (38.1 percent)

At the other end of the spectrum, WalletHub reports:

One S&P 100 company is actually paying a negative overall tax rate and is therefore due a discrete net tax benefit: Morgan Stanley.

The other companies in the bottom 10 for overall tax rates had rates ranging from -2.5  percent (Morgan Stanley) to 17.3 percent (Medtronic).

Those bottom 10 companies are:

  • Morgan Stanley (-2.5 percent)
  • Amgen (7.6 percent)
  • General Electric (10.3 percent)
  • General Motors (10.6 percent)
  • Mondelez International (13.8 percent)
  • Celgene (14.1 percent)
  • Qualcomm (14.2 percent)
  • Bristol-Myers Squibb (14.8 percent)
  • Time Warner (16.8 percent)
  • Medtronic (17.3 percent)

Several of the companies on these two lists — including Morgan Stanley — also made a separate list of the Fortune 500 companies that keep the most money in so-called offshore tax havens. To learn more, check out “Do Fortune 500 Companies Dodge Their ‘Fair Share’ of Taxes?

What’s your take on corporate tax rates in America? Sound off in our Forums. It’s the place where you can speak your mind, explore topics in-depth, and post questions and get answers.

Stacy Johnson

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