Sector Cash Taxes Paid

A big focus in the election now is Obama's call for a windfall profits tax on oil companies.  With that in mind, we wanted to see how much taxes various sectors were already paying the government.  Below we highlight a table of the cash taxes paid in 2007 from the ten sectors that make up the S&P 500.  As shown, Financials paid the most in taxes last year at $88.6 billion, while Energy was second at $69.6 billion.  Financials and Energy paid about 49% of the taxes in the S&P 500, even though their weighting in the index was about 30%.  When looking at taxes paid as a percentage of gross revenues at year end, the Energy sector was the highest at 6.37%.  The consumer sectors, Industrials, Telecom and Tech have the lowest taxes paid as a percentage of revenues.  The '07 taxes paid by the Tech sector made up about 5.8% of total taxes paid, while the sector's weight in the index was 16.7% at year end. 

The Energy sector already seems to be pulling its weight as far as taxes go.  If you're going to tax corporations even more and give the money to US citizens, it's probably fair to tax all sectors equally and not just Energy.  But fairness and windfall profit taxes don't really go together in the first place.

 

Comments

[Joe Jibroni]

Soak the rich! Soak 'em good!

[Lisa]

Government needs to get the hell out of the way of business! Then HONEST businessmen will have a chance.

[Michael S]

Wouldn't it be more appropriate to look at taxes paid relative to earnings rather than revenue? Think about two companies with equal revenues: ABC and XYZ. ABC has low profit margins and XYZ high. XYZ might pay significantly more taxes than ABC relative to revenue, but that isn't necessarily unfair if they are on par relative to earnings.

[Justin]

Michael S,

You're right. There are a number of ways you could look at it, but we were actually giving other sectors the benefit of the doubt since profit margins are so high for a sector like tech and so low for a sector like energy.

[Michael S]

Interesting. So you're saying that the results would have actually been more pronounced had you used earnings instead of revenue. Scary stuff.

Thanks for all the great work!