Cash Effective Tax Rates
of the most profitable companies since 2019
Berkshire Hathaway, Amazon and Intel have paid less than 15 percent in taxes worldwide in the past three years
Tech companies, including Alphabet
reduce their tax bills by reporting income
in countries with lower rates
Source: Washington Post analysis
of Calcbench data
Cash Effective Tax Rates
of the most profitable companies since 2019
Berkshire Hathaway, Amazon and Intel have paid less than 15 percent in taxes worldwide in the past three years
Tech companies, including Alphabet, are reducing their tax bills by reporting income in countries with lower rates
Source: Washington Post Analysis of Calcbench Data
Cash Effective Tax Rates
of the most profitable companies since 2019
Berkshire Hathaway, Amazon and Intel paid less than
15 percent in taxes worldwide in each of the past three years
Tech companies, including Alphabet, are reducing their tax bills by reporting income in countries with lower rates
Source: Washington Post Analysis of Calcbench Data
Cash Effective Tax Rates
of the most profitable companies since 2019
Berkshire Hathaway, Amazon and Intel have paid less than 15 percent in taxes worldwide in the past three years
Tech companies, including Alphabet, are reducing their tax bills by reporting income in countries with lower rates
Source: Washington Post Analysis of Calcbench Data
Tax credits and deductions are purposefully designed as tools to encourage certain behaviors. But because they lower corporate tax bills, they can take away the effectiveness of a minimal tax. Companies can still use carve-outs for research and development, capital expenditures and others to lower their tax bills. The Democrats’ climate proposal comes in the form of tax breaks – which are also exempt from the minimum corporate tax rate.
These exemptions will still allow profitable companies to achieve a tax rate of less than 15 percent, Daniel Bunn, executive vice president at the Tax Foundation, said in an email.
The minimum tax proposal would bring in $220 billion over 10 years, according to the Joint Committee on Taxation, an impartial congressional body that analyzes tax assessments. The minimum tax rate would apply to companies that report to shareholders an annual average profit of $1 billion over three years.
More than 250 companies in the S&P 500 averaged more than $1 billion in pre-tax revenue over the past three years, according to an analysis of Washington Post’s Calcbench data. Of those, 83 paid less than 15 percent in income tax worldwide. The list includes technology companies such as Amazon and Intel, banks such as Bank of America and US Bancorp, telecom giants Verizon and AT&T, and other household names such as General Motors and UPS.
The rate is calculated on a global income basis, meaning a company could theoretically have “a domestic effective tax rate of less than 15 percent as long as their foreign profits were taxed higher,” Kyle Pomerleau, senior fellow at the American Enterprise Institute, said in an email.
President Biden regularly notes that 55 profitable companies did not pay federal income taxes in 2020, according to an analysis by the Institute on Taxation and Economic Policy, a liberal think tank.
The topic of discussion ignores the fact that companies often pay different amounts in taxes from year to year. But it points to a truth the Democrats want to solve: In the long run, many companies pay less than the current standard corporate tax rate of 21 percent.
Some companies avoid federal income taxes by diverting income to countries where they operate with lower tax rates. Until the end of 2019, Google’s parent company, Alphabet, has licensed its own intellectual property from Bermuda – an offshore tax haven. Alphabet reported that its global effective tax rate was cut by billions in 2018 and 2019 because, according to a securities filing, “practically all” of its foreign income was earned by its Irish subsidiary.
Companies also reduce their taxes through deductions and credits. Amazon saved $3 billion in tax credits between 2019 and 2021 by using stock-based fees and another $2.2 billion in other tax credits, including one for research and development, according to the securities filed. The company reported federal tax expenditures of $4.1 billion for those years on $69.4 billion in U.S. pre-tax profits — an effective federal rate of less than 6 percent. (Amazon founder Jeff Bezos owns The Post.)
To gain the support of Senator Kyrsten Sinema (D-Ariz.), Democrats amended their minimum rate proposal to exclude deductions for certain investments and exempt private equity-owned companies. Those last-minute changes will further help some highly profitable businesses pay less than the minimum rate.
This analysis was based on data from Calcbench obtained from company filings with the Securities and Exchange Commission. The chart shows cash effective tax rates (tax expense divided by pre-tax income). The chart shows the 20 most profitable companies in recent years that have released enough numbers to make the calculation.
