Low Taxes At Dozens Of Firms In Spotlight After Apple Ruling

It turns out some wealthy companies are just like some wealthy hedge fund managers: They’re taxed at far lower rates than nearly everyone else.

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Whether or not Apple used illegal breaks to pay virtually no taxes in Europe over 11 years, as regulators there contend and the company denies, the order last week that it pay billions in back taxes highlights a worrisome divide among the world’s biggest corporations: Some pay relatively little taxes, others a lot.

Taxes paid in the U.S. and abroad by tech companies like Apple amounted to 24 percent of their profits in the 10 years through 2014, according to a Credit Suisse report. Energy companies paid 41 percent, nearly double.

Experts say a tax system that divides companies so starkly into winners and losers raises issues of fairness, along with questions about the wisdom of using tax codes to shape corporate behavior. It may also pose a danger to investors: Are companies that have boosted earnings by shifting headquarters abroad and other maneuvers vulnerable to a tax-collector crackdown?

Just which ones are vulnerable is difficult to know because tax rules are so complicated, but there is a lot of money at stake.

According to a May report by the research firm R.G. Associates, 78 of the biggest U.S. companies - from tech stars Facebook and eBay to glass maker Corning and food giant Kraft Heinz would have earned at least 15 percent less last year without the benefit of overseas tax rates far below that in the U.S. Stocks of each of those four companies are up more than 20 percent in the past year.

“If you have a company that moves profits and operations around the world in a snakelike fashion, you don’t know if they’re going to wind up in the regulatory cross hairs,” says Jack Ciesielski, head of R.G. Associates. “The European Union is getting much better at policing this.”