Corporate taxation has become an important issue in the U.S., as budget deficits loom and an important election approaches. Many U.S. companies have said that high corporate income tax is onerous and reduces their ability to compete globally.
Photo courtesy of Raw Pixel (Unsplash.com)
According to USA Today analysis of S&P Capital IQ data, however, there were at least 20 companies in the Standard & Poor’s 500 that reported paying an effective tax rate of 0 percent or lower for the second quarter of 2014. To be included in the analysis, the companies had to report positive earnings, including unusual items, before taxes.
One such company was drug-producing giant Merck, which had a negative effective tax rate of 7.5 percent for the second quarter, according to USA Today. In other words, taxpayers gave the company the equivalent of 7.5 percent of its quarterly profits in tax credits. Merck’s pre-tax income rose 52 percent during the quarter, coming to $1.9 billion.
This anomalous tax rate was attributed to the “beneficial impact of foreign earnings” in the company’s filing, but Merck also got a significant one-time tax benefit from an option exercise that involved AstraZeneca’s purchase of its interest in a partnership, the news source explained. AstraZeneca has also been under public scrutiny with regards to corporate tax practices.
President Barack Obama and other liberals have been making corporate taxation a major issue ahead of the 2014 midterm elections. Both sides of Congress agree that tax code reform is necessary, but many analysts agree that the political deadlock will prevent anything from happening before the elections determine the shape of the next two years.
As tax attorneys for Scarinci Hollenbeck, a regional business law firm with offices in New York, New Jersey, and Washington D.C., James F. McDonough and I are acclimated with corporate culture and the goings-on of corporations regarding income taxes. Check out some of latest post on this hot-button topic:
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Don’t Cash a “Paid in Full” Check Without Understanding the Legal Implications
Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Changes to Qualified Small Business Stock Will Benefit Startup Founders and Investors
The One Big Beautiful Bill Act of 2025 (OBBBA) significantly impacts federal taxes, credits, and deductions. A key change relating to Qualified Small Business Stock (QSBS) allows greater tax-free gains for investments in startups and other qualifying small businesses. Company founders and other investors should understand how the enhanced tax strategy works or risk missing […]
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
