The U.S. tax overhaul lowered tax rates for many companies, a Wall Street Journal analysis shows, and many others that were already toward the bottom of the scale have been able to so far stay there.
The lower rates follow tax-law changes Congress passed at the end of 2017. Since then, the Journal analysis shows, the median effective global tax rate for S&P 500 companies declined to 19.8% in the first quarter of 2019 from 25.5% two years earlier.
That marked the third straight quarter below 20% and is consistent with the goals and structure of the tax overhaul, which lowered the federal corporate rate to 21% from 35%. The law’s authors wanted to help U.S. multinationals compete in foreign markets and aid domestic companies with high tax burdens, while reducing the value of tax breaks and making it harder to achieve single-digit tax rates.
Much of the decline is coming because fewer firms are paying at the highest rate. Just 28 companies, including mining giant Freeport-McMoRan Inc. and Chevron Corp., reported a global tax rate above 32% in the first quarter, down from 143 companies before the overhaul.
The Tax Cuts and Jobs Act of 2017 limited deductions and introduced new minimum taxes on overseas income, though some of the bite of those changes was delayed to beyond 2020. Thus, 119 S&P companies including Adobe Inc. and General Motors Co. paid global tax rates below 12% in the first quarter. That is up from 93 companies before the overhaul. Read the full story.