Wednesday, April 11, 2018

Rejoice, tax fanatics! We are getting more numbers on the total effect tax reform is having on Corporate America — real dollar amounts that show just how much less, or more, companies are paying.

Calcbench examined the 2017 filings of 95 large filers to see how tax reform will affect their taxes paid individually, and as a whole group. In total, these 95 large companies expect to pay $40.3 billion less in taxes thank to the Tax Cuts and Jobs Act, although a majority of them actually expect to pay an average of $528.2 million more.

We came to these numbers through the art of tax reconciliation — the breakdown companies provide between what the statutory tax rate would require them to pay, and the taxes they actually do pay. Tracking tax reconciliation is no easy feat, since some companies report the differences in dollar terms, others in percentages, and some in both. Most companies do (thankfully) offer their reconciliations in easy-to-read tables, although a few report them in (ugh) written paragraphs.

Bottom line: tallying up the effects of tax reform is tricky, but with our database superpowers, Calcbench did it anyway.

What We Did

Calcbench examined the filings of 95 large companies (all S&P 500 filers) that report tax reconciliation in dollar amounts. We looked for any reconciliation item pertaining specifically to tax reform, and totaled up the numbers.

For example, Activision Blizzard reported 18 reconciliation items — but only one “US Tax Reform Act” item, which pushed up its expected taxes by $636 million. So that $636 million went into our tally. Boeing, meanwhile, reported an item called “Effective Income Tax Rate Reconciliation, Impact of Tax Reform Legislation” for a $1.05 billion adjustment upward. And Berkshire Hathaway reported a “Net Benefit From Enactment of TCJA” item that adjusted its taxes downward by $28.2 billion (the single largest downward adjustment we found).

Some filers reported no reconciliation items related to tax reform at all. We excluded them from our list.

The 10 filers with the largest upward increases are as follows:

The 10 filers with the largest downward cuts are these:

As we noted above, the group of 95 filers in total reported a downward adjustment of $40.3 billion. But when you look at filers individually, 51 of them expect to pay more in taxes this year — collectively, $29.94 billion more. That’s an average of $528.2 million.

On the other hand, 43 companies expect tax reform to cut their taxes this year by a collective $67.23 billion. That’s an average of $1.56 billion.

Lastly, it’s important to remember these are estimated changes that the company expects to see over 2018 and into the future. Final numbers might change in subsequent periods. Tax reform is still a work in progress for Corporate America and the tax filing industrial complex, so Calcbench will continue to keep an eye on the data as it comes in.

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