Despite widespread groans about the recent disclosure that Apple is finding ways to cut its federal tax bill, an analysis shows the computer giant is one of scores of corporations largely dodging the taxman.
A surprising number of companies in the Standard & Poor's 500, 57, have found ways to pay effective tax rates of zero, according to a USA TODAY analysis of data from S&P Capital IQ.
Corporate giants such as telecom firm Verizon, drugmaker Bristol-Myers Squibb and power management firm Eaton, all reported effective tax rates of 0% during the past 12 months. The findings underscore that while many companies bellyache about the top federal income tax rate of 35%, in reality, many pay much less than that, says Nick Yee of Gradient Analytics. "Investors hope company management is doing everything they can to generate profit, legally," he says. "But the tax code is gray, and there's often no set guidance."
Large companies find ways to a zero tax rate
Verizon 2013 annual report p18 of their report
5.730
19.6% effective tax rate
Eaton annual report online version (page 29)
Year ended December 31 2013 2012 2011
(In millions except for per share data)
Net sales $ 22,046 $ 16,311 $ 16,049
Cost of products sold 15,369 11,448 11,261
Selling and administrative expense 3,886 2,894 2,738
Research and development expense 644 439 417
Interest expense - net 271 208 118
Other (income) expense - net (8) 71 (38)
Income before income taxes 1,884 1,251 1,553
Income tax expense 11 31 201
Net income 1,873 1,220 1,352
Less net income for noncontrolling interests (12) (3) (2)
Net income attributable to Eaton ordinary shareholders $ 1,861 $ 1,217 $ 1,350
Net income per ordinary share
Diluted $ 3.90 $ 3.46 $ 3.93
Basic 3.93 3.54 3.98
Weighted-average number of ordinary shares outstanding
Diluted 476.7 350.9 342.8
Basic 473.5 347.8 338.3
Cash dividends declared per ordinary share $ 1.68 $ 1.52 $ 1.36
Bristol-Myers Squibb
18
Historically, the effective income tax rate is lower than the U.S. statutory rate of 35% due to our decision to indefinitely reinvest the
earnings for certain of our manufacturing operations in Ireland and Puerto Rico. We have favorable tax rates in Ireland and Puerto Rico
under grants not scheduled to expire prior to 2023.
Noncontrolling Interest
See “Note 3 Alliances” for a discussion of our Plavix and Avapro/Avalide partnerships with Sanofi for the territory covering the Americas.
The decrease in noncontrolling interest in both periods resulted from the exclusivity loss in the U.S. of Plavix in May 2012 and Avapro/
Avalide in March 2012. A summary of noncontrolling interest is as follows:
Year Ended December 31,
Dollars in Millions 2013 2012 2011
Sanofi partnerships $ 36 $ 844 $ 2,323
Other 1 14 20
Noncontrolling interest-pre-tax 37 858 2,343
Income taxes (20) (317) (792)
Net earnings attributable to noncontrolling interest-net of taxes $ 17 $ 541 $ 1,551
so the only 1 of the 3 that didnt pay taxes was Bristol....and right in their shareholder report they explain why
it helps when you use facts
