After all, many are still out of work after the deepest recession in more than half a century. But, at GE, innovative accounting, fervent lobbying and one of the most well-staffed and financially creative tax teams have helped the industrial conglomerate hold on to profits, even as the country faces a record budget deficit, national debt at an all-time high and the looming cost of underfunded entitlement programs.
General Electric isn't the only company that pays little in taxes. The top corporate tax rate is pegged at 35%, but the following Dow companies, all of which are profitable, are paying less than that, on a net basis. According to some analysts, corporations contribute less than 7% of total U.S. tax revenue, compared to upward of 30% in other periods of American history.
Here is a closer look at the 10 least-taxed Dow companies and how much they paid the U.S. in 2010. Below, they are ordered by their effective tax rate, the actual percentage of taxable income paid to government collectors, from low to lowest.Of note: The effective tax rate includes taxes levied by foreign governments, as well, which is why the article provides data on how much was paid to the U.S. government, specifically. In many cases, these U.S. companies are paying more in taxes to foreign governments than they are to the U.S. 10. Johnson & Johnson (JNJ) is a diversified health-care company, with pharmaceutical, health-care supply, medical-devices and consumer-products businesses. It's most widely known as a maker of consumer products such as Band-Aids and Listerine. The company's sales have declined modestly in 2010, but net income and earnings per share rose 8.7% and 8.6%, respectively. J&J had a net profit margin of 12% in the fourth quarter. The company generated $62 billion in sales and more than $17 billion of pre-tax income during fiscal 2010. Yet, it was taxed at an effective rate of 21%, with $1.2 billion of current international tax expenses, $356 million of deferred international tax expenses and $2.1 billion of U.S. taxes paid. J&J's effective tax rate fell from 22% in 2009 and 24% in 2008.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV