Taxed-To-The-Hilt Businesses

By Katie Adams | February 04, 2010 AAA
Taxed-To-The-Hilt Businesses

Think your taxes are high? While the combined federal and state corporate tax rate in the U.S. is 39.1%, second only globally to Japan (39.5%), many businesses pay much more than in other parts of the world.
Capital IQ, a data tracking company owned by the McGraw-Hill companies, researched the S&P 500 to compile a list of index companies that make the most in actual cash payments toward taxes and, by dividing actual tax payments by pretax income (excluding extraordinary items), have the highest average four-year real tax rate. Take a look at the ten firms paying the highest real corporate tax rates in the U.S.: (Learn about the pros and cons of these specialized ETFs, and get in on the opportunities they can provide, in An Introduction To Corporate Bond ETFs.)

  • VeriSign (Information Technology) – This 15-year-old firm provides internet infrastructure services and paid $14.7 million in taxes in 2008. However, its tax payments over a four-year period averaged an astounding 391.3%

  • Fidelity National Information Services (Information Technology) – FIS is a publicly-traded corporation that provides financial institutions with processing services and products. The four-year-old firm paid $57.4 million in cash for its 2008 tax bill, but its four-year average tax percentage rate was 254.8%.

  • Zions Bancorporation (Financial) – Originally founded in 1955 as Keystone Insurance and Investment Corporation, Zions Bancorporation went public in January, 1966. Zion paid out $303.2 million in cash for taxes in 2008. Its four-year average tax rate is 226.1%.

  • Eastman Kodak (Consumer Discretionary) – The 130-year-old company, which bid a fond adieu to its well-known Polaroid camera in 2009, is performing well on Wall Street but paying a dear price in actual cash tax payments. Eastman Kodak paid out $145 million in cash for taxes in 2008, and its average four-year tax rate is 142.1%.

  • Sun Microsystems (Information Technology) – Sun Microsystems was recently acquired by Oracle Corporation (ORCL), but prior to its acquisition it paid out $87 million in cash for its tax bill. Its average four-year tax rate is 139.5%.

  • Citigroup (Financial) – Slowly riding its way out the international credit crunch, Citigroup just reported a full-year 2009 net loss of $1.6 billion. In 2008 the company paid out $3.170 billion in cash in taxes; its four-year average tax rate is 106.3%.

  • Motorola (Information Technology) – This global communications solutions provider has been in business for more than 80 years. In 2008, it paid out $407 million in cash for its total tax bill, and over four years the firm averages a tax rate of 106%.

  • Goodyear Tire & Rubber (Consumer Discretionary) – This global leader in tire manufacturing employs over 71,000 people at more than 60 plants in 25 countries worldwide. The company posted net sales of $19.5 billion in 2008, but also paid out $278 million in cash to the tax man. Its four-year average tax rate is 84.1%.

  • Northeast Utilities (Utilities) – New England's largest utility system provides services through five companies to more than 2 million customers in three North-Eastern states - Connecticut, Massachusetts and New Hampshire. In 2008, the firm actually was due a tax refund to the tune of $36.1 million; however, its four-year average tax rate is 70.7%.

  • Dominion Resources (Utilities) – This power and energy company provides energy services to customers in five states (North Carolina, Ohio, Pennsylvania, Virginia and West Virginia) and is one of the oldest utility companies in the U.S. The firm was ranked number 157 on the Fortune 500 list in 2009. It paid out $413 million in cash for taxes in 2008. Its average four-year tax rate is 69.6%.

Conclusion
If you cringe when you see how much you're having withheld from your paycheck for taxes each pay period, take solace by remembering how much more some of the most well-known businesses in the U.S. have had to pay the IRS. (Some countries have begun charging a flat tax rate instead of the gradual tax system of the Western world. Should The U.S. Switch To A Flat Tax?)

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