24/7 Wall St.: As Washington tries to find its way out of increasing debt, the debate continues over whether American companies should pay more or less in taxes. Meanwhile, some of the largest U.S. public corporations paid no taxes at all for 2012. As a matter of fact, several of America’s biggest companies received tax credits that rose into the hundreds of millions, or even billions, of dollars. Losing money or taking write-downs has become a sort of benefit for several well-known corporations.
There are several ways a company can avoid paying taxes. One is simple: The corporation loses large sums of money, and as a by-product it pays no taxes or even gets tax credits. Battered retailer J.C. Penney managed to do that last year.
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Another way to get federal tax benefits is through huge fines, mostly for illegal behavior, or behavior the government claims is illegal. Bank of America was able to do that as it paid billions of dollars in penalties for its misdeeds, particularly in its mortgage divisions.
Yet another set of circumstance that can get a company tax benefits and prevent the payment of taxes entirely might be called “acts of god.” Financial results of both Verizon and Caesars were badly hurt by Hurricane Sandy. As a result, accounting rules allowed them to take write-offs or losses.
The debate over whether American companies should be able to pay less than the 35% corporate tax has gone on for years, and may continue in the years ahead. High tax rates, some experts argue, help lower the national debt. Other experts believe that low tax rates free up capital, which allows companies to invest in plants and equipment and to add jobs.
The debate aside, several huge U.S. companies managed to dodge the tax man completely.
To identify the companies that pay the least in taxes, that is those with the lowest taxes and the largest tax provision from the government, 24/7 Wall St. reviewed corporate tax payments for the top 150 companies by revenue. Included in our analysis were company financials, including income, employee count and earnings before taxes. These were either provided by Capital IQ, or obtained by 24/7 Wall St. reviews of SEC filings or financial statements. All data, including taxes paid, are for 2012, or the most recent complete fiscal year.
These are the companies paying no taxes.