Special Report

Companies Paying the Most Taxes

5. Walmart
> Income tax expense: $7.98 billion
> Earnings before taxes: $25.74 billion
> Revenue: $469.16 billion
> 1-yr. share price change: 21.87%
> Industry: Supermarkets

Wal-Mart Stores Inc. (NYSE: WMT) is the largest company in the United States and the largest employer. Unlike some of the other companies on the highest taxpayer list, particularly the banks and oil companies, Walmart is relatively young, founded in 1962. Since that time, expansion has outpaced traditional American retailers, such as Sears, Kmart and J.C. Penney Co. Inc. (NYSE: JCP), each of which has struggled as Walmart has expanded. Walmart’s annual tax payment has been above $7 billion in each of its past five fiscal years. Walmart’s size has become something of a disadvantage because it is hard for the retailer to grow much faster than the economy in general. Recently, the company’s U.S. same-store sales were up only 2.2% In a recent conversation with the media, Charles M. Holley Jr., Walmart’s chief financial officer, said “I don’t think the economy’s helping us.”

Also Read: Ten Companies Profiting Most from War

4. Wells Fargo
> Income tax expense: $9.10 billion
> Earnings before taxes: $28.47 billion
> Revenue: $79.45 billion
> 1-yr. share price change: 16.77%
> Industry: Banks

Wells Fargo & Co. (NYSE: WFC) is often considered the most successful of the four U.S. money center banks, the others being Citigroup Inc. (NYSE: C), J.P. Morgan Chase and Bank of America Corp. (NYSE: BAC). Since the start of 2008 (when the bank bought Wachovia and nearly doubled its size), the year of the global financial crisis, Wells Fargo shares have rallied more than those of the other three. Wells Fargo’s success is largely due to the fact that it has not relied heavily on investment banking and proprietary trading. The former is considered an unreliable source of revenue, the latter risky. Wells Fargo leans more on consumer banking. And its national customer base tends to be concentrated in a few markets that it dominates. That keeps the firm’s cost of maintaining large numbers of branches low. As Morningstar recently commented, “more than one third of the bank’s deposits come from markets in which Wells Fargo is the preeminent player, and more than two thirds are gathered in markets in which the company ranks among the top three.” Wells Fargo’s annual tax bill dropped as low as $602 million in 2008, and has risen steadily each year since.

3. Apple
> Income tax expense: $14.21 billion
> Earnings before taxes: $55.96 billion
> Revenue: $164.69 billion
> 1-yr. share price change: -20.68%
> Industry: Computer hardware

Apple has made a furious race up the ladder of top corporate tax payers. As appeal for its iPad, iPhone and Mac products has exploded, its tax payments have gone from $2 billion four years ago to $4.5 billion two years ago. And it has increased threefold since then. But these days Apple is facing several growth challenges, which could threaten its spot near the top of the tax tables and already have cut its stock price by one-quarter from record levels. Due to the iPhone’s success, Apple was the dominant producer of smartphones since 2007. But Samsung passed Apple in smartphone sales in 2011. The iPad’s dominance, too, has been threatened by Google Android-based tablets, the growth of which will put it ahead of Apple iOS-based products this year, according to research firm IDC. Other threats to Apple’s growth include the fact that its success in the mammoth Chinese market has been very modest.

2. Chevron
> Income tax expense: $20.00 billion
> Earnings before taxes: $46.33 billion
> Revenue: $222.58 billion
> 1-yr. share price change: 9.52%
> Industry: Oil and gas

It is somewhat unfair to say that Chevron is a more modest sized version of Exxon, but in many cases it is. Chevron is the third largest public company in the U.S. based on sales, just above another energy multinational, ConocoPhillips, which was recently broken into two parts. Chevron has paid more than $10 billion a year in taxes in every year except one since 2005. And its revenue since the same year has only once dropped below $200 billion during that time. Like other large energy companies, it has added liquid natural gas to its reserve base, because natural gas currently accounts for 23% of the world’s energy consumption. One challenge Chevron faces as it moves forward is the difficulty of finding new oil fields. This will require Chevron to make greater and greater efforts at deepwater drilling and oil sands production. Chevron is sanguine about its long-term prospects; it expects to increase production 20% by 2017.

Also Read: The Worst-Paying Cities for Women

1. Exxon Mobil
> Income tax expense: $31.05 billion
> Earnings before taxes: $78.73 billion
> Revenue: $428.38 billion
> 1-yr. share price change: 6.56%
> Industry: Oil and gas

Large multinational oil companies have been among the largest payers of corporate federal taxes for years. Exxon’s income tax amount was approximately the same in 2011 as it was in 2012 — $31 billion. A simple reason for Exxon’s position at the top of the tax paying list is its size. It vies with Walmart each year for the spot as the publicly traded U.S. company with the greatest revenue. Exxon’s revenue has averaged more than $400 billion a year from 2007 to 2012. Part of Exxon’s success is tied to the price of crude oil. A barrel of WTI crude was worth $35 in 2003. The price reached $60 in 2006 and rarely dropped below it thereafter. It rose above $100 in 2008 and has occasionally topped that price since then. Whether Exxon can stay atop both the tax and revenue list much longer depends on several factors, not the least of which are new sources of energy led by solar, wind and particularly shale-based fossil fuels. One benefit Exxon has that may allow it to keep the top position as America’s largest company is its role as the number one producer of natural gas.

Also Read: Companies Paying the Least in Taxes