Apple pays the most taxes, but not at the highest rates.
"As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world." —Tim Cook, letter to Europe
Not seeing the graphic? Try the website.
Note: Earlier versions of this chart had two different numbers for Amazon's tax rate, neither of which seems to be correct. Until I understand what's going on, I'm taking it out.
See also:
http://www.businessinsider.com/what-just-happened-to-apple-explained-2016-8#pt0-317816
The only part they left out was that it was the US State Department that gave Apple and other companies the idea to do this in the early days after Apple went public.
I’m no BRexit fan but this certainly makes the EU look terrible.
Relative to the size of the company, Apple pays FAR more taxes than Amazon, although you sure wouldn’t get that impression from your article or your chart.
Speaking of charts, you might want to show that in one of those nifty charts of yours. Talk about an eye-opener!
I haven’t computed the rest of the companies.
I wasn’t saying your first chart’s numbers were wrong. I was saying your chart was comparing the percentage of tax to net income, which made Amazon’s contribution to taxes look huge.
But if you compare the percentage of tax to revenue rather than net income, all of a sudden Apple’s tax contribution looks huge and Amazon’s looks tiny.
That’s all.
Sorry for the confusion I’ve caused.
Minor in the case of MSFT, but I evidently used a quarter’s data rather than a fiscal year’s data for FB. Sorry about that!
FB revenue = 17.9 B
FB income before taxes = 6.2 B
FB income after taxes = 3.7 B
FB taxes = 2.5 B
FB % of net (after tax) income = 67.6%
FB % of gross (before tax) income = 40.3%
FB % of net revenue = 14.0%
MSFT revenue = 85.3 B
MSFT income before taxes = 19.8 B
MSFT income after taxes = 16.8 B
MSFT taxes = 3.0 B
MSFT % of net income = 17.9%
MSFT % of gross (before tax) income = 15.2%
MSFT % of revenue = 3.5%
For fy ’15:
FB revenue = 6.4 B
FB income before taxes = 2.8 B
FB income after taxes = 2.1 B
FB taxes = 0.7 B
FB % of net (after tax) income = 33.3%
FB % of net revenue = 10.9%
IBM revenue = 81.7 B
IBM income before taxes = 15.9 B
IBM income after taxes = 13.4 B
IBM taxes = 2.5 B
IBM % of net (after tax) income = 18.7%
IBM % of revenue = 3.1%
MSFT revenue = 85.3 B
MSFT income before taxes = 19.8 B
MSFT income after taxes = 16.9 B
MSFT taxes = 2.9 B
MSFT % of net (after tax) income = 17.2%
MSFT % of revenue = 3.4%
GOOGL revenue = 75.0 B
GOOGL income before taxes = 19.7 B
GOOGL income after taxes = 16.3 B
GOOGL taxes = 3.4 B
GOOGL % of net (after tax) income = 20.9%
GOOGL % of revenue = 4.5%
AMZN revenue = 107.0 B
AMZN income before taxes = 1.6 B
AMZN income after taxes = 0.6 B
AMZN taxes = 1.0 B
AMZN % of net (after tax) income = 166%
AMZN % of revenue = 0.9%
AAPL revenue = 233.7 B
AAPL income before taxes = 72.5 B
AAPL income after taxes = 53.4 B
AAPL taxes = 19.1 B
AAPL % of net (after tax) income = 35.8%
AAPL % of revenue = 8.2%
FB = 25%
IBM = 15.7%
MSFT = 14.6%
GOOGL = 17.3%
AMZN = 62.5%
AAPL = 26.3%
$94B in revs would be for the fiscal year ending June 2015, but they’ve reported another since then, $85B in June 2016. And, the the tax rate would be lower.
I typically like to look at the last 4 fiscal years to take out some of the lumpiness that a single year may have due to a big reorg or other write down, acquisition, etc. If you look at Microsoft in 2015, you get an outlier year.
The 3 companies I track that are included in your table, I have the tax rate average for the last 4 FYs as:
Apple 26.0%
Google 18.7%
Microsoft 21.7%
Of course, Apple’s tax rate, similar to other multinationals, is what they book, pending repatriation of foreign income. Essentially, this quick and dirty look at tax rates only indicates which companies tend to be conservative when accounting for foreign income. Apple books a far higher percentage of tax on its foreign income typically than its peers. If it didn’t book any US corp tax on its foreign income, Apple could be as low as 12% net effective.
One implication of that, is that multinational companies have a great deal of leeway in determining their net effective tax rate, depending upon what they declare to the IRS about potential foreign income repatriation. Apple is ultraconservative, booking a far higher amount of tax than its peers. Given the leeway, I’ve always found it interesting and reassuring that Apple doesn’t seem to manipulate its deferred income amount in order to meet or exceed analyst earnings expectations. A less scrupulous company could easily do so.
Tax divided by before-tax income:
FB = 25%
IBM = 15.7%
MSFT = 14.6%
GOOGL = 17.3%
AMZN = 62.5%
AAPL = 26.3%
Google 18.7%
IBM 20.0%
Microsoft 21.7%
Apple 26.0%
Operating income (before taxes) is a better metric to plot on any chart. A dual axis chart would be better (Operating income [bar chart] on the left and Taxes [line chart] on the right).
I wish the flip graph had just shown the amount of taxes paid rather than the percentage.
I like your idea of showing just income taxes PAID to support Tim Cook’s comment that Apple is the biggest taxpayer in the world. I know it doesn’t fit the skeptics’ narrative that Apple is a tax cheat but it’s the truth.