Most analyses of the gap between the tax rate on the books and the “effective rate” companies actually pay rely upon company financial statements, but the GAO’s work is based on actual corporate tax returns for 2010. The researchers found that large companies – those “with assets of $10 million or more” – that are profitable paid about 12.6 percent of their global income in U.S. taxes. The figure rises to 16.9 percent of global income if all foreign, state, and local taxes are factored in. Companies that took a loss for the year actually paid a higher rate than the profitable ones.
In the spring, Apple CEO Tim Cook defended his company’s entirely legal tax avoidance strategies before a Senate committee. Apple used Ireland-based subsidiaries to pay almost zero tax on tens of billions in income from international sales, and other massive firms like Google and Microsoft use similar corporate structures and accounting strategies to avoid billions in taxes.