The Multinational Tax Advantage

As President Barack Obama considers overhauling corporate taxes, big companies complain that the U.S.'s 35 percent top rate is one of the highest levies in the world. They also note that America, unlike most industrial economies, taxes corporate income earned abroad. But a University of North Carolina study of U.S. multinationals' effective tax rates—what companies paid from 2003 to 2007, after credits and deductions and sometimes shifting profits to low-tax jurisdictions—shows the differences are not that great. U.S. multinationals paid 26 percent on average, slightly more than the global average of 25 percent. Companies without major overseas units, such as retailers, often have higher effective rates.

Effective tax rates, in percentages, averaged over 2005-2009

Industrial and Heavy Machinery

Siemens, Germany: 29
United Technologies, U.S.: 27.5
Caterpillar, U.S.: 24.7
Hyundai Heavy Industries, South Korea: 24.2
General Electric, U.S.: 11.5


AstraZeneca, Britain: 29.5
Johnson & Johnson, U.S.: 22.8
Bayer, Germany: 20
Pfizer, U.S.: 18.7
Sanofi-Aventis, France: 18.2


SAP, Germany: 31
Apple, U.S.: 28.5
Microsoft, U.S.: 26.7
Nokia, Finland: 23.9
Cisco Systems, U.S.: 21.6

Financial Services*

Wells Fargo, U.S.: 30.9
Royal Bank of Canada, Canada: 24.7
Bank of America, U.S.: 24.7
Deutsche Bank, Germany: 24.2
HSBC, Britain: 20.6


Gap, U.S.: 38.6
Home Depot, U.S.: 36.7
Costco, U.S.: 36.3
Carrefour, France: 32
Inditex, Spain: 23.5


Chevron, U.S.: 43.9
ExxonMobil, U.S.: 41.7
BP, Britain: 33.8
Petrobras, Brazil: 30.2
Petrochina, China: 24.7

* Some U.S. financial companies received temporary tax allowances after the financial crisis, resulting in unusually low rates for 2008 and 2009

Data: Bloomberg; Company reports

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