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May 22, 2015

Top U.S. Corporations That Paid No Income Taxes in 2014

Every working American is required to pay income taxes, but American companies get away with paying zero…

This year, the IRS collected roughly $1.4 trillion from U.S. taxpayers on April 15. Even individuals exempt from the federal income tax are subject to payroll taxes – and even the 14% exempt from both still must pay a sales tax.

But 11 Standard & Poor's 500 Index giants paid no income tax in 2014, even though they reported a profit for the year according to USA Today. Forty-three more were at least partially exempt.

That means there are a record 54 U.S. corporations that pay no taxes or are at least partially exempt. That's more than twice the amount five years ago. Most of them actually got tax refunds.

On top of that, there are currently 13 Fortune 500 companies that don't pay taxes. We are talking about some of the biggest businesses in the nation. CBS Corp. (NYSE: CBS), which earned $1.8 billion in 2014, paid no federal tax, and received a $235 million tax refund. (If you look back at the last five years, one more Fortune 500 giant makes the list. General Electric Co. [NYSE: GE] made $33 billion from 2010-2014, paid no taxes, and received $1.4 billion in refunds.)

By keeping their cash parked overseas, companies like CBS avoid triggering U.S. corporate taxes. Instead, they take advantage of foreign tax structures that are much more forgiving. You see, according to Cato Institute research, the U.S. has the highest corporate tax rate among major industrial nations. Its effective tax rate of 35.6% on new corporate investment is nearly twice the average rate for the 90 countries studied.

As these giants dodge taxes, it's no surprise their contribution toward the nation's total tax revenue has declined.

In fiscal 2014, 10.6% ($320.7 billion) of the federal government's total revenue came from corporate income taxes, according to Pew Research Center. Comparatively, corporate income tax accounted for between a quarter and a third of federal revenue in the 1950s.

Let's take a look at exactly which companies wriggled their way out of paying income taxes in 2014…

S&P 500 Corporations That Don't Pay Income Taxes

CompanySymbolNet income 2014
Goodyear Tire & Rubber Co.Nasdaq: GT GT$2.45 billion
TE Connectivity Ltd.NYSE: TEL$1.9 billion
Eaton Corp. plcNYSE: ETN$1.79 billion
Tyco Int'l PLCNYSE: TYC$1.73 billion
Masco Corp.NYSE: MAS$856 million
Royal Caribbean Cruises Ltd.NYSE: RCL$764.1 million
Wynn Resorts LimitedNasdaq: WYNN$731.6 million
Darden Restaurants Inc.NYSE: DRI$666.6 million
Level 3 Communications Inc.NYSE: LVLT$314 million
FirstEnergy Corp.NYSE: FE$299 million
Cabot Oil & Gas Corp.NYSE: COG$104.5 million
*Sources: S&P Capital IQ, USA TODAY
**Uses data from calendar year 2014.

Fortune 500 Corporations That Don't Pay Income Taxes

CompanySymbolNet income 2014
CBS Corp.(NYSE: CBS)$1.8 billion
Interpublic Group of Companies Inc.(NYSE: IPG)$365 million
Mattel Inc.(Nasdaq: MAT)$268 million
Owens Corning(NYSE: OC)$106 million
PG&E Corp.(NYSE: PCG)$1.84 billion
PEPCO Holdings Inc.(NYSE: POM)$406 million
Priceline Group Inc.(Nasdaq: PCLN)$73 million
Prudential Financial Inc.(NYSE: PRU)$3.49 billion
QUALCOMM Inc.(Nasdaq: QCOM)$3.21 billion
Ryder System Inc.(NYSE: R)$270 million
Time Warner Inc.(NYSE: TWX)$4.3 billion
Weyerhaeuser Co.(NYSE: WY)$960 million
Xerox Corp.(NYSE: XRX)$629 million
*Sources: Corporate 10-K Annual Reports, TheAntiMedia.org
**Uses data from calendar year 2014.

Courtesy Tara Clarke for Money Morning

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle
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