These companies have the highest, and lowest, total tax rates
As the GOP prepares to release the details of its plan to reform the U.S. tax code, many American corporations are anxiously awaiting a reduction in the corporate tax rate.
While the U.S. business tax rate is among the highest in the developed world, the country’s largest companies paid about 27% in state, federal and international taxes in 2016, according to a new study released by WalletHub, which analyzed the rates paid by the largest 100 companies on the S&P 500. These same companies paid about 30% lower rates internationally when compared with U.S. rates.
Some corporations, however, paid taxes much higher than the average rate. American construction and equipment company Caterpillar (NYSE:CAT) paid an overall tax rate of more than 138% last year, the study found, by far the highest rate of any of the S&P’s largest companies. Pipeline and transportation company Kinder Morgan (NYSE:KMI) followed in second place, paying a cumulative tax rate of 56%. Home improvement company Lowe’s (NYSE:LOW) ranked third, paying a rate of 40.5%, according to WalletHub, barely edging out insurance giant UnitedHealth (NYSE:UNH), which paid 40.4%.
On the other hand, two companies had a negative overall tax rate when state, federal and international taxes were factored in. Energy behemoths General Electric (NYSE:GE) and ExxonMobil (NYSE:XOM) both boasted the lowest overall tax rate at -5.1% in 2016. Forbes reported similar findings in a study released in April. General Electric was also cited in a study by the U.S. PIRG Education Fund and the Institute in Taxation and Economic Policy, conducted last month, as one of the top three companies having the most cash stored in tax havens overseas.
Dow Chemical (NYSE:DOW) paid a rate of 0.2%, while IBM (NYSE:IBM) paid a cumulative rate of 3.6%.
WalletHub also found that the average corporate tax rate paid by the companies studied was about 29%. Data from the U.S. Treasury Department released last year, found that the average rate paid by any corporation was 22% over the period from 2007 to 2011. Thirty-five percent is the U.S. statutory business tax rate.
Republicans were expected to release the specific details of their tax plan on Wednesday, however late Tuesday, House Ways and Means Committee Chair Rep. Kevin Brady, (R-Texas), announced that the reveal would be postponed by one day.
The corporate tax rate is largely expected to be slashed by 15 percentage points to 20%. Whether that change will be gradually implemented over a phase-in period or immediately upon the bill’s approval, has yet to be intimated.
The Trump administration said that reducing the tax rate for businesses will make the U.S. corporate environment more competitive on the world stage, and thereby attract new investments, spurring job creation and economic growth.