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Business taxes may sound high, but these companies pay a lot less

The U.S. corporate tax rate may be 35 percent, but most companies end up paying far less after accounting for specific tax breaks.

Some, like utilities, gas and electric companies, paid only 3.1 percent in taxes on their domestic income over the last eight years, according to an updated study released this week by the Institute on Taxation and Economic Policy.

But not all industries have the same access to those loopholes. Telecom companies and industrial machinery companies also paid less than half the official rate, while companies in the retail and health-care sectors paid close to the full 35 percent.

The study calculated effective rates for companies in the Fortune 500 that have been profitable over the full period — companies that report losses, of course, receive even more favorable tax treatment. Here's how much companies paid, broken down by FactSet economic sector:

Effective rates vary both between and within industries.

Within consumer nondurables, for example, Clorox paid about 28 percent, while Levis Strauss paid 11 percent. In consumer services, McDonald's paid 37 percent, Yum Brands paid 26 percent and Darden Restaurants paid 13 percent. Defense company Boeing paid only 5 percent, even as its competitor General Dynamics shelled out 27 percent.

As the report notes, the difference within each industry "demonstrates how loopholes in our tax code can create huge economic distortions by giving some companies a tax advantage over their competitors."

Each company's and industry's unique tax position also will determine how much it has to gain or lose from tax code changes proposed by the Trump administration.

The plan could cut the statutory rate from 35 percent to 15 or 20 percent, which would be most beneficial to retailers like Best Buy, Lowe's and CVS, which have few loopholes currently bringing down their taxes. On the other hand, companies that already pay little in taxes could see their rates go up if the administration tries to balance reforms by removing certain tax breaks.

Overall, the 258 companies in the report paid an overall effective rate of 21 percent over the eight years ended in 2015, and 18 paid no federal income tax at all over that period.