Your taxes are due today. Here's something that will make you feel better: You paid nowhere near as much as these poor companies.
There are 10 companies in the S&P 500, including energy company Anadarko Petroleum (APC), data center operator Equinix (EQIX) and online auctioneer eBay (EBAY) that paid effective tax rates of 60% or greater during last calendar year, according to a USA TODAY analysis of data from S&P Capital IQ. One was much more … try 2,994% as a tax rate. A company's effective tax rate is a way to measure what percent of a company's taxable income goes to the taxman.
The massive tax bills makes your tax bracket look much better, don't they? Investors have been carefully watching corporate tax rates for more than a year – and some companies didn't even pay any taxes last calendar year. Fancy corporate tricks, such as using mergers with foreign entities, have become a way to escape U.S. taxes. There's also a trend for U.S. companies to borrow money in the U.S., so they can avoid U.S. taxes. These company pay dividends to U.S. investors while leaving foreign funds overseas and away from U.S. tax collectors.
But with these companies—the wow factor is just how large the tax bills are.
When it comes to staggering tax bills, no company that can get near Anadarko Petroleum. The oil and gas exploration and production company reported paying an effective tax rate of 2,994% in 2014. That's a staggering tax bill of $1.6 billion, a whopping sum when the company reported earnings before taxes of just $54 million. The company blamed the tax hit on a settlement of a legal case and the "tax impact from foreign operations," in its annual report. As if falling oil prices wasn't enough of a bummer—the massive tax bill sure was.
Some more familiar companies got hammered by the tax man in calendar 2014, too. Look no further than eBay. The company paid a staggering effective tax rate of 99% in 2014. That means practically all the company's $3.53 billion in earnings before taxes was paid out last year as a $3.49 billion tax bill. eBay didn't provide any detail in its annual regulatory filing on why its tax liability was so large relative to income in its annual report.
EBay did highlight just how important tax rates are to investors—and profit. "Based on our results for the year ended December 31, 2014, a one-percentage point change in our provision for income taxes as a percentage of income before taxes would have resulted in an increase or decrease in the provision of approximately $35 million, resulting in an approximate $0.03 change in diluted earnings per share," according to eBay's annual report.
So before you get upset about writing a check to the IRS—just be glad you're not one of these companies.
Feel better yet?