1 Jan 2016

How much in taxes do U.S tech companies pay yearly

The large tech giants in the United States of America are often accused of tax evasion. By making calculated financial decisions such as stashing huge amounts of their revenues in countries where corporate tax laws are quite lenient.
Tim Cook who is the current Chief executive of Apple during an interview with 60 minutes; when asked about the company’s alleged practices towards tax evasion; he responded by refuting the allegations and added that Apple pays it taxes to the government “every tax dollar it owes” Tim also disapproved of the current U.S tax code terming it as being one which is outdated in a digital age. He also added that compared to other companies, Apple pays the highest taxes.
As much as the claim may be true in terms of total monies, however, the taxes the company pays are not proportional to the company’s eccentric profits.
For instance, in 2014, the total amount paid by Apple in income taxes was $13.97 billion. Surprisingly, this figure is greater than the total income taxes of IBM, Google and Microsoft combined. However, the most significant aspect is that the company’s average rate for which its pre-tax profits are levied (effective tax rate) for 2014 was 26.1%.
Despite this figure being higher than that of other companies in the tech industry, the percentage figure is less than the average tax rate levied on S&P 100 companies by 2.5 percentage points when compared for the same year (2014). It is also fair to mention that the statutory federal income tax rate is 35%.
With comparison to the S&P 100 average tax rate of 28.6% in 2014, Apple is not the only Silicon Valley tech company trying to reduce the amount of taxes they pay. Surprisingly, it is among the tech companies that are paying the highest amounts in taxes when compared to its fellow peers.
According to the statista website, the following companies in the US tech industry paid their effective tax rates as follows in the year 2014. 
Facebook led the group with an effective tax rate of 40.1% followed by Apple with 26.1%. Intel followed Apple closely with 25.9%, while IBM and Microsoft followed at 21.2% and 20.7% respectively. Finally you get Google and Cisco almost tying with 19.3% and 19.2% respectively.


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