If you're an average American, you paid about 20% of your income toward federal tax in 2015 — and that doesn't even count the state and local taxes you may owe. It might make you mad, then, to learn that several huge pharmaceutical companies and technology firms pay far less in taxes, according to a new report from WalletHub.
The personal finance site looked at the S&P 100 — an index of the 100 largest U.S. firms across industries — to compile their results. WalletHub ranked the companies by total effective corporate tax rate, including all federal, state and international taxes paid by each company in 2015.
Data came from the Internal Revenue Service, company annual reports and research by consultancy firm Quantria.
Overall, WalletHub found, companies in the S&P 100 pay a 28% tax rate on average, consistent with the last few years — but a number of firms pay a lot less.
Take General Motors, for example, which paid an effective tax rate of -34.3% in 2015. Yes, that is a negative number, meaning Uncle Sam effectively paid GM through tax subsidies and credits — though many of those credits are set to expire soon, according to USA Today.
Other firms that managed to pay comparably low tax rates included energy multinational Chevron and food company Mondelez International, which paid 2.7% and 7.5%, respectively — far less than the 10% federal rate for taxpayers making less than $9,275 a year.
Here are the 10 companies paying the least amount of tax in the S&P 100:
1. General Motors: -34.3%
2. Chevron: 2.7%
3. Mondelez International: 7.5%
4. 21st Century Fox: 12.6%
5. Amgen: 13%
6. Lilly Eli & Co: 13.7%
7. IBM: 16.2%
8. Gilead Sciences: 16.4%
9. Google: 16.8%
10. Merck & Co: 17.4%
There are many reasons, including financial losses, that companies might pay an effective rate that's lower than the statutory federal U.S. corporate tax rate of 35% (or 39% total, if you include state tax).
One such reason is that the United States has one of highest corporate tax rates in the world, so overseas operations tend to lower a company's effective tax rate.
Indeed, three of the companies on the list — IBM, Google and Merck — have all stashed enormous amounts of money overseas, a common legal — if unsavory — method of tax avoidance, according to a recent report.
Keep in mind, WalletHub looked only at companies listed on the S&P 100: One USA Today analysis of 2015 taxes for the 500 largest U.S. corporations found that 27 didn't pay any taxes at all — despite turning profits.