Please ensure Javascript is enabled for purposes of website accessibility

Do These Companies Not Pay Enough Tax?

By Dan Caplinger – Updated Feb 15, 2017 at 11:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The latest study from the Citizens for Tax Justice accuses more than two dozen companies of paying zero tax. Find out which companies made the cut.

Taxes have been controversial for decades, with no one thinking they pay their fair share. Lately, one big issue has been whether corporations should pay more tax, and the Citizens for Tax Justice recently released a report arguing that General Electric (GE), Boeing (BA)Verizon Communications (VZ), and nearly two dozen other corporations paid no tax between 2008 and 2012. Is that fair, or are there other factors to consider?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, takes a closer look at the CTJ report. In particular, Dan notes that you have to be sure you know what you're looking at in studies like this, as there can be big differences between the tax allowances companies include in their income statements and the actual cash they pay in taxes from year to year. Moreover, Dan points out that items like depreciation for Verizon, timing issues and tax incentives for General Electric, and revenue-recognition timing for Boeing can distort snapshots of tax payments, requiring a longer-term look at taxes to get the complete picture. Dan concludes that you have to look beyond the headlines to have an informed opinion about whether companies pay too much or too little in tax.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of General Electric. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.