Which Companies Paid The Most Income Tax In 2014

Apple's market capitalization of $730 billion may now be more than double that of Exxon Mobil, but when it comes to taxes paid to the US government, it's no contest: the company with record profitability that so many progressive hipsters adore and for whose products they line up with annual regularity is billions of dollars below its "fair" contribution to the US Treasury. Ironically, it is eclipsed by that other company that so many progressives love to hate: Exxon Mobil, which paid $4 billion more in tax than Apple, yet whose valuation has been cut by 15% over the past year as a result of the collapse in oil prices.

 

What is also notable, is that using FactSet data, even as companies remitted a record amount of taxes, some $775 billion in 2014, this was equivalent to a 28.1% tax rate: the lowest tax in the past 5 years, as well as in recent history.

Here are some more observations on which S&P company paid what in taxes in the past year.

What Was the Average Tax Bill for An S&P 500 Company This Past Year?

 

This past Wednesday (April 15) marked the deadline for Americans to file their federal income taxes with the IRS. In terms of the S&P 500, what did the average company in the index pay in income taxes over the past year? How did this amount compare to recent years?

 

Looking at income taxes paid by S&P 500 companies with a fiscal year ending in the past 12 months (Mach 2014 through February 2015), the average amount of annual income taxes paid was $866.1 million. This amount is above the average from one-year ago ($706.1 million) and above the average of the past five years ($654 million). Companies that reported negative values for income taxes paid were excluded from these averages.

 

At the company level, Exxon Mobil paid the highest amount of income taxes of all S&P 500 companies over the past year (fiscal year ending in December 2014) at just over $18 billion. Over the past five years, Exxon Mobil has paid the largest amount of income taxes on average at $25.2 billion.

 

Looking at the tax rate (which is defined for this analysis as taxes paid divided by pretax income) for S&P 500 companies with a fiscal year ending in the past 12 months (March 2014 through February 2015), the average tax rate was 28.1%. This amount is slightly below the percentage from one-year ago (28.7%) and slightly below the average of the past five years (also 28.7%). Companies with tax rates that were either below 0% or above 100% were excluded from these averages.

 

Thus, it appears that while the average amount of money S&P 500 companies have paid in income taxes has increased over the past five years (as the average amount of earnings have also increased over this period), the average tax rate for S&P 500 companies has remained relatively consistent over this period.

Actually, it has declined.

Which means that in a world in which the marginal capacity of central banks to monetize debt and thus fund various government through outright monetization of deficits, slows down as they run out of bonds to purchase, it will be up to these said government to politely approach the above companies, and all others, and remind them that while everyone enjoyed the past 7 years of record surging stock prices, the time of soaring corporate income tax is coming.

Which is also why corporate insiders and shareholders are withdrawing funds at a record pace today in the form of buybacks and dividends: because they all see the writing on the wall - it is now only a matter of time the government comes knocking and demanding its deferred pound of flesh.