House Democrats have just proposed that the corporate tax rate rises to 26.5% from the current 21.0%. The current rate was set by legislation passed under President Trump. The higher rates are meant to help cover the costs of the new $3 trillion-plus spending package triggered by plans of the Biden administration.
Corporate taxes paid by America’s largest companies are complex. Taxes for businesses that operate overseas are often paid at lower rates in those countries. Numerous efforts have been made, some successfully, to tax those profits in the United States. However, some large companies pay no taxes at all. They may operate at a loss, or they have deductions that keep them from having to make any annual payments.
On the other hand, some of America’s largest and most profitable companies pay taxes at a rate well above those stipulated by law.
Wallet Hub has just released its Corporate Tax Rate Report. The study looks at federal, state and international taxes paid by the S&P 500 companies. The overall tax rate for these companies is 20%. However, the authors point out:
Nine S&P 100 companies, Wells Fargo & Co, Salesforce.com Inc., AbbVie Inc., Duke Energy Corp., Adobe Inc., Broadcom Inc., International Business Machines Corp., Medtronic Inc and General Electric Co., are actually paying a negative overall tax rate and are therefore due a discrete net tax benefit.
The tax rate for Wells Fargo, one of America’s largest banks, was −1,015.20%. In 2020, revenue was $39.8 billion, down from $47.2 billion the year before. It had an income tax benefit of $3 billion, compared to income tax expenses of $4.2 billion in 2019.
The rates of the other companies mentioned above:
- Salesforce (−59.00%)
- AbbVie (−36.02%)
- Duke Energy (−28.13%)
- Adobe (−25.96%)
- Broadcom (−21.20%)
- IBM (−18.63%)
- Medtronic (−18.52%)
- GE (−9.12%)