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News Blog

Tax-Free Living

by Josh Loftin
- Posted // 2010-04-06 -

Apparently, the key to tax freedom in the United States is to drill for oil and stash your money in foreign countries.

Among the top 25 American companies, five paid nothing to the United States government in taxes for 2009, according to a report from Forbes magazine. Those include Exxon Mobil, Bank of America, General Electric, CitiGroup, and Valero. Additionally, almost half of the companies paid taxes at less than a 20 percent rate.

Oh, but it was a bad financial year, right? Well, yes and no. Valero (a chain of gas stations) lost money, so even 100 percent of zero is zero. And the two banks have write-offs coming from the government, which means, according to Forbes, that their tax bills will probably be zero for quite a few years to come. (No, I can't explain it).

But Exxon Mobil actually had $35 billion in pre-tax income, and amazingly paid $15 billion in taxes worldwide. But somehow, they paid zero dollars to the U.S. government. And General Electric made $10 billion last year, but also paid nothing. As the report says: "GE Capital has displayed an uncanny ability to lose lots of money in the U.S. and make lots of money overseas, where tax rates are lower." (Coming in just under the bar is Chevron, which only paid $200 million in taxes on $18.5 billion in earnings).

On the flipside, about the only company that the report says good things about is Costco, whose financial statements are described as "straightforward and refreshing." Their tax bill came in at 36 percent, one of the highest among the 25 companies, amounting to $630 million in taxes on $1.7 billion in earnings.

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