Monday, June 27, 2011

How Big U.S. Companies Would Rank as Countries

Based on 2010 sales revenue, Business Insider has a list of how 25 of America's largest companies compare to the GDP of entire countries in 2010, here are the top three:

1. With 2010 revenues of $414 billion, Walmart would rank as the world's 26th largest economy, right behind #25 Norway, which produced $422 billion of GDP last year.

2. Exxon would rank as the world's 30th largest economy with $355 billion of revenue, ahead of Thailand's $319 billion of GDP. 

3. Chevron would rank #46 in the world with $196 billion in sales last year, ahead of the Czech Republic's GDP of $192 billion.  

HT: Robert Kuehl

Update: Please note that sales revenue and GDP are measures of different types of economic activity and are not directly comparable in a pure economic or scientific sense.  Consider this to be more of an amusing comparison that allows us to put the billions of dollars of revenue that Walmart or ExxonMobil generate every year into some context by comparing those dollar amounts to the annual output of entire country, giving us an appreciation of the size of America's largest companies.    

69 Comments:

At 6/27/2011 2:29 PM, Blogger DL said...

By an odd coincidence, Walmart and Exxon are the top targets of the political left.

 
At 6/27/2011 2:42 PM, Blogger Buddy R Pacifico said...

From the Business Insider article:

"Fannie Mae is bigger than Peru."

Yes, and this U.S. government corp. helped create more mountains of debt than the Andes.

 
At 6/27/2011 3:03 PM, Blogger Rufus II said...

Yeah, too bad these companies don't pay U.S. Income Taxes.

 
At 6/27/2011 3:42 PM, Blogger VangelV said...

Yeah, too bad these companies don't pay U.S. Income Taxes.

Of course they do. Exxon pays massive amounts of taxes to the US government. And Wal-Mart's profit margin of 3.5% is less than what the states get in sales taxes.

The nice thing about the companies is that they do not start wars or send soldiers abroad to conquer other nations or protect dictators. All they do is provide goods and services that people buy willingly and by doing so improve the standard of living not only of their workers and suppliers' workers but the consumers as well. What we need are more companies and fewer governments.

 
At 6/27/2011 3:42 PM, Blogger VangelV said...

Yeah, too bad these companies don't pay U.S. Income Taxes.

Of course they do. Exxon pays massive amounts of taxes to the US government. And Wal-Mart's profit margin of 3.5% is less than what the states get in sales taxes.

The nice thing about the companies is that they do not start wars or send soldiers abroad to conquer other nations or protect dictators. All they do is provide goods and services that people buy willingly and by doing so improve the standard of living not only of their workers and suppliers' workers but the consumers as well. What we need are more companies and fewer governments.

 
At 6/27/2011 4:21 PM, Blogger DL said...

Yes, the large, integrated oil companies do pay "massive" amounts of taxes. Maybe not enough for Obama or Chuck Schumer (after all, the oil companies are evil and greedy), but many tens of billions nonetheless.

And yes, retailers in general have very thin profit margins; in addition, there's no easy way for retailers to shift revenues overseas, and so they do pay taxes to Uncle Sam if they have profits here.

 
At 6/27/2011 4:27 PM, Blogger Jet Beagle said...

Rufus: "Yeah, too bad these companies don't pay U.S. Income Taxes."

Rufus, where did you get such an idea?

ExxonMobil operates around the world, earns income in a number of nations, and pays income taxes just about everywhere.

XOM's total income taxes and effective tax rate:

2010: $21.6 billion (45%)
2009: $15.1 billion (47%)
2010: $36.5 billion (46%)

XOM's total tax and duties bill for those years:

2010: $89.2 billion
2009: $78.6 billion
2008: $116.3 billion

 
At 6/27/2011 4:41 PM, Blogger DL said...

Jet Beagle,

I’ve heard other people say that XOM pays a tax rate on the order of 46%, so you’re certainly not alone in saying that.

Neverthless, I don’t understand why ANY company would have to pay such a high tax rate. The top rate is supposed to be around 35%, but I thought that no one pays even that much, because of all the deductions.

 
At 6/27/2011 4:48 PM, Blogger DL said...

Some people have said that GE didn’t pay taxes last year. This Washington Post article discusses that issue:

http://wapo.st/e4o1tq

 
At 6/27/2011 5:54 PM, Blogger Matt Burgess said...

Mark, I love your site, but GDP is a value added measure, revenue is not, and the two measures are incomparable. Martin Wolf in 2004 "Why Globalisation Matters" called this comparison an elementary howler. From memory he was beating up activists who compare company revenue to national GDPs to argue for excessive company power.

 
At 6/27/2011 6:02 PM, Blogger Larry G said...

how about these non-American companies.

Are they bigger than countries also:

http://www.forbes.com/lists/2009/18/global-09_The-Global-2000_Rank.html

 
At 6/27/2011 6:25 PM, Blogger Rufus II said...

The last I heard Exxon didn't pay a cent of U.S. Income Tax in 2009.

Foreign Countries charge them a hefty "Royalty" on the oil they extract, but have changed the Wording from Royalty to "Income Tax."

As a result, their payments to other countries in the form of Royalties are deducted from U.S. Income Taxes owed, and they pay nothing here.

Meanwhile, we pay hundreds of billions/yr for their protection.

Nice little racket.

 
At 6/27/2011 6:30 PM, Blogger Larry G said...

re: GE taxes (from the link):

" Samuels said at a tax forum in February that GE needs a tax system that will let it compete effectively with such giant, foreign-based multinationals as Mitsubishi, Siemens and Phillips. However, their effective tax rates for earnings purposes last year were 40 percent, 31 percent and 26 percent, respectively, compared with 7 percent for GE."

Maybe that's why GE ranks #1
and Siemens 35, Mitsubishi 21, eh?

 
At 6/27/2011 6:38 PM, Blogger Che is dead said...

"Yeah, too bad these companies don't pay U.S. Income Taxes."

It's too bad that they are forced to pay any taxes at all. The corporate tax rate should be ZERO.

 
At 6/27/2011 6:42 PM, Blogger Benjamin said...

I wonder if the day of the large company is numbered--I think many large employers have fewer employees than 10 years ago.

Every large organization becomes increasingly inefficient and self-serving over time. The free market destroys such enterprises, eventually.

Unfortunately, civilian and military federal agencies last forever, becoming coprolite. Expensive coprolite.

 
At 6/27/2011 6:46 PM, Blogger Larry G said...

top 6 ranked companies by profits:

1. ExxonMobil 45 billion
2. Gazprom 27 billion
3. Royal Dutch Shell 27 billion
4. Chevron 24 billion
5. BP 21 billion
6. Petro China 20 billion


http://www.forbes.com/lists/2009/18/global-09_The-Global-2000_Prof.html

 
At 6/27/2011 6:54 PM, Blogger morganovich said...

DL

xom does not pay 46% in taxes, they pay 76%.

the 46% is just income tax. add in duties and oil based sales tax and the number is 76% of operating profits.

oh, and rufus, walmart paid 1.8bn in income tax last year on 5.378 bn in pretax income.

that's a 33.5% tax rate.

do you have even one shred of credible evidence that it somehow was not paid?

what, you think the IRS and the SEC don't talk? you cannot file a 10k stating you paid 1.8bn in taxes, then file a tax return for none. that sort of thing gets noticed.

also: if XOM is avoiding income taxes, they are pretty bad at it. they are paying 7 percentage points above the maximum us rate.

they would LOVE to pay income taxes here. it would save them 1.3 billion dollars a year.

you act as though they are doing something reprehensible, when in fact, they are being gouged by other governments in exchange for being allowed to drill in their borders.

take it up with angola, not exxon.

 
At 6/27/2011 7:00 PM, Blogger morganovich said...

sorry, that's 1.3bn last quarter, paying us income tax instead of those they are forced to pay would have saved them 3.7bn last year.

your whole argument is ridiculous.

you argue that xom is somehow avoiding taxes by being a sophisticated tax cheat, yet they are paying far more than they would if they just paid taxes here.

why would such a sophisticated player deliberately arrange themselves to pay an extra 3.7 billion (that's billion with a B) in taxes?

 
At 6/27/2011 7:03 PM, Blogger morganovich said...

"Every large organization becomes increasingly inefficient and self-serving over time. The free market destroys such enterprises, eventually. "

this is counteracted by intrusive government and regulation.

big companies do better under heavier regualtion than do small ones. they have the lawyers, lobbyists, and deep pockets to take advantage of the system.

small cos get creamed.

look at the european corporate state for a good example.

the more we emulate them, the more difficult it is to be entrepreneurial.

 
At 6/27/2011 7:15 PM, Blogger PeakTrader said...

The difference between WalMart revenue, for example, and government revenue is:

For each dollar, WalMart gives you something worth more than a dollar, while government gives you something worth less than a dollar.

 
At 6/27/2011 7:19 PM, Blogger PeakTrader said...

And if government made a profit (instead of destroying private profits), it would spend that too.

 
At 6/27/2011 7:21 PM, Blogger VangelV said...

The last I heard...

Heard where? You have this habit of making statements that are totally bogus. You are either making them up or are misquoting out of context.

 
At 6/27/2011 7:23 PM, Blogger Michael E. Marotta said...

Wal-Mart and Exxon and the store around the corner and the guy playing guitar in front of the bank all produce things that people want. Norway is just a place where people happen to live.

 
At 6/27/2011 7:24 PM, Blogger VangelV said...

" Samuels said at a tax forum in February that GE needs a tax system that will let it compete effectively with such giant, foreign-based multinationals as Mitsubishi, Siemens and Phillips. However, their effective tax rates for earnings purposes last year were 40 percent, 31 percent and 26 percent, respectively, compared with 7 percent for GE."

Good for GE. Its management should make sure that the company pays as little tax as possible.

But what I find interesting is that the idiot lefties who keep attacking GE for its tax avoidance strategies have no problem throwing billions in subsidies for products that GE makes but could never sell in a competitive marketplace because they make no sense.

 
At 6/27/2011 7:27 PM, Blogger VangelV said...

Every large organization becomes increasingly inefficient and self-serving over time. The free market destroys such enterprises, eventually.

The market should destroy inefficient companies. The problem is that governments usually try to save them. Just look at the GM boondoggle.

 
At 6/27/2011 7:28 PM, Blogger Michael E. Marotta said...

When I worked on a project at Honda in 2001, they sent me to Alabama. "Lincoln?!" I said. "There ain't no place in Alabama named Lincoln."

I have worked projects at Ford and GM. I have been on projects delivering to Chrysler and Toyota. Many factors come together to explain the success of Honda and Toyota. The gestalt is easy to recognize.

 
At 6/27/2011 7:33 PM, Blogger morganovich said...

"The difference between WalMart revenue, for example, and government revenue is:"

i don't think he was talking about government revenue, he was talking about GDP.

not the same thing.

he has a point about revs vs gdp.

if you are a car company and you buy transmissions from another company, both you reported revenues do not count toward gdp, otherwise you could have infinite GDP by all selling each other the same car over and over.

the revenue of the transmission co gets subtracted from the revenue of the car co when calculating the car cos contribution to GDP.

for this reason, you cannot compare revenue to GDP. the aggregate revenue of us companies far exceeds gdp.

to get a meaningful comparison, you would need to compare GDP to something like gross profit.

 
At 6/27/2011 8:20 PM, Blogger Rufus II said...

You guys keep spouting stuff about Exxon paying 46%, or somesuch. Possibly in some other country (although, actually, they're just paying royalties,) but they don't pay anything like that in the U.S., and don't pretend to.


Exxon NEVER, EVER said that they paid 46% in U.S. Income Taxes. Only that they paid this amount in "income taxes."

Who do you think you're fooling when you repeat this twaddle?

 
At 6/27/2011 9:14 PM, Blogger VangelV said...

Exxon NEVER, EVER said that they paid 46% in U.S. Income Taxes. Only that they paid this amount in "income taxes."

Who do you think you're fooling when you repeat this twaddle?


They pay taxes. End of story. The federal government in the US makes more money off the gasoline and other products sold by Exxon than Exxon does. And no, they should not pay taxes on income earned abroad because nobody else does either. As many here have pointed out, Exxon gives people what they want and makes our lives better. Sadly, the opposite is true of the government, which gives us wars, limits our freedom, and transfers our earnings and wealth to special interest groups in order to buy votes.

 
At 6/27/2011 9:38 PM, Blogger DL said...

On the subject of Exxon taxes:
This is an article on Motherjones saying that XOM paid no taxes in 2009:

http://bit.ly/9vpe7a

^^^^^^^^^^^^^^^^^^^
This is a BusinessWeek article on the subject of XOM’s taxes, and seems to be pretty balanced, but it was published in May of 2008:

http://buswk.co/igI18n

^^^^^^^^^^^^^
These were both published at cnn.com this year, and discuss XOM’s taxes:

http://bit.ly/lSDbbT
http://bit.ly/mDvnkn

In the first of these, the following is stated:

“Exxon's average effective U.S. income tax rate over the last six years is about 29%, according to the firm's security filings and an interview with a top Exxon tax lawyer”

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
I have no trouble believing the 29% figure, averaged over the last 6 years.

 
At 6/27/2011 9:45 PM, Blogger DL said...

Whether XOM has averaged a 15% rate over the last 5 years, or a 30% rate, an important question for me would be that of the CONSEQUENCES of imposing a higher rate on them. The fact is that PEOPLE ultimately bear 100% of the burden of taxes that are imposed on corporations. At the same time, however, the situation is more complicated in the case of multinational corporations than it is in the case of purely domestic companies. The taxes laws that are imposed in a given country will have an effect on the number of people employed in that country. If we were to raise the after-tax cost of drilling for oil in the U.S., that would result in fewer jobs (in the oil/gas industry). So much depends on how the tax is structured.

 
At 6/27/2011 10:04 PM, Blogger Ron H. said...

"You guys keep spouting stuff about Exxon paying 46%, or somesuch. Possibly in some other country (although, actually, they're just paying royalties,) but they don't pay anything like that in the U.S., and don't pretend to.


Exxon NEVER, EVER said that they paid 46% in U.S. Income Taxes. Only that they paid this amount in "income taxes."

Who do you think you're fooling when you repeat this twaddle?
"

Your selective reading isn't serving you well. Try reading entire comments, and then try to COMPREHEND what you have read.

Then, try to understand that a corporation is a group of people, who are taxed on any income they receive from the corporation, so if you tax the corporation, you are taxing those people twice.

Why do you want to do that?

The best way to encourage growth and new jobs is to tax corporations less, not more. With 0 corporate income tax, the US would become a tax haven, and companies would flock here.

This has been explained to you numerous times, but you still come back with that same idiotic whine about collecting more corporate income taxes.

 
At 6/27/2011 10:34 PM, Blogger Rufus II said...

I said it before, and I'll say it again: I don't care if you tax Corporations 20%, 10%, or 5%. Just Collect. The. Damned. Taxes.

Right now, they're just transferring the the profits to subsidiaries in foreign countries, and, as a result of our idiotic tax laws, leaving those profits there, forever.

The U.S. loses out on, not just whatever taxes they might pay, but, much more importantly, on any Investments the Corporations might have made using that money.

This is total insanity.

 
At 6/27/2011 10:42 PM, Blogger morganovich said...

"Exxon NEVER, EVER said that they paid 46% in U.S. Income Taxes. Only that they paid this amount in "income taxes.""

rufus, and we keeping telling you that 1. they pay a ton of other taxes and that 2. they would love to pay us taxes instead if they could as it would save them nearly 4 billion dollars a year.

so what is the point of your repetitive stupidity?

what is it you propose should be done?

then DL debunks your argument.

you are just talking nonsense and supporting it with nothing at all.

that, rufie, is the twaddle around here.

seriously, is it brain damage or what? you repeat the same crap over and over in the face of evidence that proves you wrong and demolishes your whole thought process. no data seems to get through to you.

also:

i notice that you have dropped your walmart claims.

i presume it's because you realized you are totally wrong. (which you were)

why is it you cannot get the XOM facts through your head?

you have been shown to be wrong on outrageous claim after claim and never provide an supporting evidence.

you need a new hobby.

 
At 6/27/2011 10:46 PM, Blogger morganovich said...

"Right now, they're just transferring the the profits to subsidiaries in foreign countries, and, as a result of our idiotic tax laws, leaving those profits there, forever"

so explain this to me roofie:

why would exxon transfer profits to higher tax jurisdictions?

that's assinine. no one would do that.

your whole argument around XOM falls on its face over this point, as it has every other time you have tried to make it.

they pay income taxes 7-10 points higher than the us maximum.

by your logic they are choosing to do this to save on taxes.

why on earth would they rather pay 46% to libya instead of 36% to the US?

 
At 6/27/2011 10:50 PM, Blogger Ron H. said...

"I said it before, and I'll say it again: I don't care if you tax Corporations 20%, 10%, or 5%. Just Collect. The. Damned. Taxes."

I said it before & I'll say it again. The taxes that are due in the US are being collected in the US.

How about if corp tax rates were 0%? Would you be OK with that? Do you understand why that would be a good thing?

"Right now, they're just transferring the the profits to subsidiaries in foreign countries, and, as a result of our idiotic tax laws, leaving those profits there, forever."

Taxes due in foreign countries are paid in foreign countries, and those due in the US are paid in the US. There is no cheating going on. Every dollar due in the US is being collected in the US.

Is there something you don't understand about this?

 
At 6/27/2011 11:17 PM, Blogger Rufus II said...

Companies including Apple Inc. (AAPL) and Microsoft Corp. (MSFT) have kept their cash overseas to avoid paying as much as a 35 percent U.S. repatriation tax on their earnings. The 11 companies in the report hold an average of 73 percent of their cash overseas, and Moody’s predicts that number will increase to 79 percent by 2014.

Microsoft, based in Redmond, Washington, holds $42 billion overseas, or 84 percent of its cash and short-term investments, the most by dollar value of any company in the report. Apple, in Cupertino, California, has $40.2 billion in overseas dollars, 61 percent of its cash and short-term investments, an almost sixfold increase from 2006, Moody’s wrote. Oracle Corp. (ORCL), in Redwood City, California, has 90 percent of its cash and short- term investments overseas, about $21.9 billion, which is the highest percentage among the 11 companies in the report.


Bloomberg Article

 
At 6/27/2011 11:21 PM, Blogger Rufus II said...

Exxon is taking business expenses (Royalties) and being allowed to write them off as "Income Taxes" to foreign governments.

You can call me stupid all day long, but you can't change the facts.

 
At 6/27/2011 11:23 PM, Blogger Rufus II said...

What Walmart claims?

 
At 6/27/2011 11:27 PM, Blogger Rufus II said...

BTW, we're 2/3 through the fiscal year, and Corporate Taxes collected are still less than $90 Billion.

 
At 6/27/2011 11:30 PM, Blogger DL said...

Rufus @ 11:17

No question that the large multinationals keep a large cash hoard overseas. The number floating around is two trillion dollars.

But what of it?

Let’s suppose, for purposes of discussion, that the “lefties” got their way, and they could get a law passed which mandated that any company domiciled in the U.S. must repatriate all overseas earnings in the year in which it was earned, and further, that the top corporate rate would be raised to 50%, and moreover, that many of the current deductions would be eliminated.

I would actually be willing to concede, under that hypothetical, that there would be a “one-time” benefit to the U.S. Treasury (depending on how the hypothetical is structured, exactly). But what then? Why should ANY multinational company “want” to be domiciled in the U.S. in that scenario? Financially, the only sensible course of action would be for the Exxons of the world to become domiciled somewhere else. Alternatively, some multinationals might just want to sell off their foreign assets to a foreign company to whom those assets would be worth more on an after-tax basis.

 
At 6/27/2011 11:48 PM, Blogger Rufus II said...

Well, DL, have you ever heard me advocate such an action? That's a strawman.

I said, Make the Tax Rate Reasonable, and, then, collect the damned taxes. I would Love to see a 15% or 20% Corporate Tax Rate. Hell, make it 10%; that's not the most important consideration.

The Main thing is we're getting our investment capital locked up Overseas. No one's winning on this.

 
At 6/28/2011 2:30 AM, Blogger Ron H. said...

"The Main thing is we're getting our investment capital locked up Overseas."

Whose investment capital, exactly?

 
At 6/28/2011 2:32 AM, Blogger Ron H. said...

Rufus, you didn't answer my question. Would you be OK with a 0% corporate tax rate? If not, why not?

be sure you have read and understood my comment about double taxing people.

 
At 6/28/2011 2:46 AM, Blogger Ron H. said...

"Well, DL, have you ever heard me advocate such an action? That's a strawman."

Well yes, that's exactly what you have advocated. DL is just using an extreme example. I believe his point is, if you make it unpleasant enough for US based companies, there won't be any.

"I said, Make the Tax Rate Reasonable, and, then, collect the damned taxes. I would Love to see a 15% or 20% Corporate Tax Rate. Hell, make it 10%; that's not the most important consideration."

What is a reasonable tax rate to charge on income which has already been taxed elsewhere?

If a company is charged a percentage of the revenue they earn from extracting oil in a foreign country, what is the difference what you call that charge? How is an 80% royalty different than an 80% tax? It's the same amount of money out of your earnings. this is a non issue, Roofie, get over it.

 
At 6/28/2011 5:01 AM, Blogger Larry G said...

sounds like Rufus got it right, eh?

"How Our Largest Corporations Made $170 Billion During Great Recession And Paid No Taxes"

http://blogs.forbes.com/rickungar/2011/06/01/how-our-largest-corporations-made-170-billion-during-great-recession-and-paid-no-taxes/

"Analysis: 12 Corporations Pay Effective Tax Rate of Negative 1.5%on $171 Billion in Profits; Reap $62.4 Billion in Tax Subsidies"

http://www.scribd.com/doc/56809745/12-Corporations-Pay-Effective-Tax-Rate-of-Negative-1-5-on-171-Billion-in-Profits

 
At 6/28/2011 8:15 AM, Blogger morganovich said...

larry-

that article is either written to be deliberately misleading and inflammatory, or the writer is an idiot.

most of the profits made in the last couple years have been in capital accounts.

if you have an asset that goes from $100 to $200 in value (say a stock) you have to recognize that as GAAP profit, but it is not taxable until you sell it.

rufus has been making this mistake in trying to calculate tax rates all along because without this deliberate distortion, his whole case falls apart.

the average income tax rate for S+P 500 companies is 26%.

sure, there are a few companies liek GE that rpetty much exist just to suckle at the government nipple and whose political patronage allows them to do so, but such behavior is far from being the rule.

also:

if i am ceo of cisco and i can pay lower taxes if i manufacture in china and keep that as a subsidiary, why shouldn't i do that? if fact, i am REQUIRED to do that. i have a fiduciary duty to my shareholders.

rather than ask why cisco would avoid taxes (just like you do i suspect, you don't have to write off your charitable donations or mortgage interest you know) the better question is "why is the US deliberately making itself to unattractive for business"?

business exist for their shareholders, not as milchcows for government.

if the plant is in china, using chinese infrastructure and protected by chinese police etc, what possible rationale is there for the US to collect taxes on it?

 
At 6/28/2011 8:24 AM, Blogger Larry G said...

I'm not generally in favor of corporate taxes - per se and the bottom line is that companies do not print money so anything that is a cost to them - becomes an added cost to their products and services - passed on to the consumer.

But what I find interesting is the discussion about what they actually do pay in taxes (or not) both here and in other countries and I think it's pretty clear than in the US - that the EFFECTIVE Tax rate is fairly low - and lower than many other countries.

I've not seen what the EFFECTIVE tax rate is in China, Indonesia, Japan, Asia, etc but if it is LOWER than the EFFECTIVE Tax rate in the US then by how much.

The article provided - the first one is from FORBES which is generally known for it's pro-business point of view but they do print other points of view.

If you believe the article as well as the referenced group Citizens for Tax Justice, the claim is that some of the top companies not only don't pay a tax - but they end up netting money from the govt.

One more thing.

If you look at the US Budget - you'll see that of the 1.3 trillion dollars that we take in - in income taxes - about 300 billion comes from Corporations - so we know for a fact that corporations are paying taxes in the whole.

Could we increase incomes tax rates on individuals 300 billion dollars worth to offset the loss of tax revenue from the Corporates?

 
At 6/28/2011 8:30 AM, Blogger Larry G said...

also.. I would presume that for multi-country conglomerates that they only pay taxes in each country on the operations in that country - not worldwide.

And if that is true - take a look here at the world's largest companies of which many are NOT primarily located in the US and more than likely pay substantially more in corporate taxes than companies in this country.

http://www.forbes.com/lists/2009/18/global-09_The-Global-2000_Prof.html

why would these companies continue to locate their operations in countries where the EFFECTIVE tax rate is 3, 4, 5 times what it is in this country?

 
At 6/28/2011 9:41 AM, Blogger VangelV said...

so what is the point of your repetitive stupidity?

It feeds his delusions.

 
At 6/28/2011 9:44 AM, Blogger VangelV said...

You can call me stupid all day long, but you can't change the facts.

First, we do call you stupid all day because that is the way we see it. Second, you have never shown any interest in facts when they were presented to you.

 
At 6/28/2011 9:46 AM, Blogger VangelV said...

But what then? Why should ANY multinational company “want” to be domiciled in the U.S. in that scenario? Financially, the only sensible course of action would be for the Exxons of the world to become domiciled somewhere else.

That is one thing that has been surprising me. I would have thought that given the situation many American multinationals would move their headquarters abroad.

 
At 6/28/2011 9:47 AM, Blogger VangelV said...

The Main thing is we're getting our investment capital locked up Overseas. No one's winning on this.

It is more than just the tax rate. It is also the regulatory state and the uncertainty associated with it.

 
At 6/28/2011 9:57 AM, Blogger Jet Beagle said...

Larry G: "why would these companies continue to locate their operations in countries where the EFFECTIVE tax rate is 3, 4, 5 times what it is in this country?"

I cannot answer that question for all the companies you included in the article you referenced. But I do know about two of them.

FedEx locates operations in outside the U.S. because that's where they pick up and deliver almost half the packages they move. They would not be a $21 billion global service company if they located all operations in the U.S.

ExxonMobil operates in other countries because that's where the petroleum deposits are located. Also, many other nations do not place as many restrictions on drilling as the U.S. does. XOM would not be a $370 billion global energy company if it restricted operations to the U.S.

 
At 6/28/2011 11:04 AM, Blogger morganovich said...

"that the EFFECTIVE Tax rate is fairly low - and lower than many other countries."

you are barking up the wrong tree here.

the effective tax rate in the us winds up being around 30%. the average for the very sophisticated S+P 500 is 26%, and that's including financial earnings that are recorded under GAAP but not actually taxable until sale.

that makes the rate on taxable income for the S+P more like 33%.

there are VERY few countries around the world that even have a top rate (much less an effective one) that high. and keep in mind that that's just federal. some state tack up to 12% more onto that.

china is 25. lots of EU countries are in the teens. california is nearly 50. gee, i wonder why companies want to offshore?

 
At 6/28/2011 11:10 AM, Blogger Larry G said...

" XOM would not be a $370 billion global energy company if it restricted operations to the U.S."

XOM is one of more than 60 companies involved in oil & gas exploration, refining and sales.

Many of them operate or are based in countries that have a much higher effective tax rate than here.

As far as restrictions and regulations, it would be interesting to see a list of countries that have oil & gas exploration, their regs, and their output.

In terms of sales - Europe and Japan and Australia have significant taxes on the refined product.

In Europe, taxes can be as much as $4.00 a gallon - beyond the actual cost of the fuel - no matter where the oil is drilled.

Suffice to say that the top 7 companies in the world in profits are multi-national oil&gas companies of which XOM is the largest but by no means the only one nor the only highly profitable one even when the country restricts drilling and adds $4.00 per gallon to it's price.

 
At 6/28/2011 11:12 AM, Blogger Larry G said...

re: effective tax rate

so this article is wrong??

http://www.scribd.com/doc/56809745/12-Corporations-Pay-Effective-Tax-Rate-of-Negative-1-5-on-171-Billion-in-Profits

 
At 6/28/2011 11:22 AM, Blogger morganovich said...

rufus-

your arguments about royalties being counted as income tax just demonstrates how ignorant you are.

royalties come out of pre tax profits. thus, they are deductible.

if i inlicence a drug from a biotech in exchange for paying them a royalty on my sales, that counts as cost of goods sold.

why wouldn't it?

paying a royalty reduces your profits. you'd be taking the same amount out if it's a royalty or you call it a tax credit.

the numbers work out to be the same.

you need to get yourself an education on basic accounting. you seem to be badly confused about some very basic concepts.

 
At 6/28/2011 11:31 AM, Blogger morganovich said...

yes. that article is wrong.

so is your interpretation of it.

they are only purporting to speak about 12 companies. even if they were right, it would be nothing like a valid representation of the whole economy.

their numbers are also a mess. not only to they include capital gains that are not taxable in their profit numbers, but the numbers themselves are wild distortion that are unsupported by any credible evidence i can see.

ibm paid 25% income tax last year.

they claim 2%.

VZ paid 20% income taxes last year, not -5.9%.

they are just flat out lying. you need to be more selective in your data sources.

they also use very selective tax accounting. XOM pays outlandish federal taxes other than income tax. by the time they are done, they have a 76% tax rate at least half of which goes to the government. i doubt there is any company that pays more us taxes than xom.

 
At 6/28/2011 11:39 AM, Blogger morganovich said...

"Many of them operate or are based in countries that have a much higher effective tax rate than here"

as does XOM.

that's why they pay income taxes 10 points above the US max.

also:

your argument about gasoline taxes is tangential. that is a tax paid by consumers. it's not a cost to a corporation nor does it affect their margin, it's just a pass through. their profit per gallon of gas remains unchanged.

 
At 6/28/2011 11:50 AM, Blogger Larry G said...

" they are just flat out lying. you need to be more selective in your data sources."

is there a site that shows the correct numbers?

I could not find where this site actually got their numbers - not a good sign....

 
At 6/28/2011 12:03 PM, Blogger morganovich said...

pull their sec filings.

http://www.sec.gov/edgar.shtml

alternately, just punch them into yahoo and look at the income statement if you want just raw numbers:

http://finance.yahoo.com/q/is?s=VZ&annual

 
At 6/28/2011 12:34 PM, Blogger Dano said...

Anyone remember The People's Almanac published sometime in the 70's? If I recall correctly, one of the items included in this publication was a list of countries by size and included corporations in the list. Several of the largest companies; G, GM, Shell, Standard of New Jersey (Exxon; were in the top 10, if not top 5, in size. So what happened? How did these large companies end up being lower on the current list?

 
At 6/28/2011 1:57 PM, Blogger Jet Beagle said...

Dano: "How did these large companies end up being lower on the current list?"

I don't know how your 1970's source determined company and country sizes, so I can't be certain. But I do know of two major changes that occurred since 1970:

1. China, India, and Brazil became economic powerhouses

2. the real value of petroleum increased significantly, and development of such resources enabled the GDP's of Canada and Russia to increase far more than the increases realized by Exxon and Shell.

 
At 6/28/2011 2:45 PM, Blogger Rufus II said...

Cisco Systems Inc. (CSCO) has cut its income taxes by $7 billion since 2005 by booking roughly half its worldwide profits at a subsidiary at the foot of the Swiss Alps that employs about 100 people.


Cisco’s techniques cut the effective tax rate on its reported international income to about 5 percent since 2008 by moving profits from roughly $20 billion in annual global sales through the Netherlands, Switzerland and Bermuda, according to its records in four countries.


Bloomberg

 
At 6/28/2011 2:46 PM, Blogger VangelV said...

Cisco Systems Inc. (CSCO) has cut its income taxes by $7 billion since 2005 by booking roughly half its worldwide profits at a subsidiary at the foot of the Swiss Alps that employs about 100 people.

Wonderful. What is the point?

 
At 6/28/2011 3:01 PM, Blogger Rufus II said...

Larry, Corporate taxes are only $85 Billion in the first 8 months of the fiscal year.

They will be lucky to reach $150 Billion, much less $300 Billion.

Morgan, YOU are the one that needs an accounting course if you can't see the difference between counting royalties as a business expense, and counting them as a Credit.

 
At 6/28/2011 4:32 PM, Blogger Ron H. said...

"Morgan, YOU are the one that needs an accounting course if you can't see the difference between counting royalties as a business expense, and counting them as a Credit."

You need to reread his comment again. Go slowly. If there are terms or concepts you are unfamiliar with, ask him for clarification.

 
At 6/28/2011 4:43 PM, Blogger Ron H. said...

"Cisco Systems Inc. (CSCO) has cut its income taxes by $7 billion since 2005 by booking roughly half its worldwide profits at a subsidiary at the foot of the Swiss Alps that employs about 100 people."

Another inflammatory and misleading opinion piece.

What is your point?

 

Post a Comment

Links to this post:

Create a Link

<< Home