10% of S&P 500 Companies Avoid Paying US Taxes

While tax day for Americans is fast approaching, it may surprise many that 54 of the biggest companies in America, or 10% of the S&P 500, pay very little or no taxes at all.
6:34 | 04/14/15

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Transcript for 10% of S&P 500 Companies Avoid Paying US Taxes
Okay. It's Tuesday April 14 the markets and new Yorker opening up this morning 54. Doesn't seem very big but here's the number behind this number of behind the number tax paper Americans fast approaching numbers being Christ accountants furiously working to meet rusted line. Check slightly reminiscent of the government it might surprise you though that 54. Of the biggest companies in America all in the S&P 500. May pay very little or no taxes at all Lou when I'm down Cutler and New York 54 company that's 10% of the SB 500. Now at least partially exempt from paying corporate income tax so here more errant astronaut who finance who obviously has already filed his taxes right mr. task. Yeah and ending the great thing about this it's perfectly legal it's you know and you can't we corporations for do you that they are taking advantage of some huge. How you how how how is this happen. How's it happening well as having a couple ways one is through what's called an inversion where US company will merge. When a foreign based company. Even if the US companies bigger that the foreign based company becomes the parent quote unquote. Then the company's address is overseas where Uncle Sam can't tax them. The other way the companies are doing is they're converting themselves into REIT or real estate investment trust. Or other structures that are designed specifically to avoid taxes and ISIS' with a whole Cayman Islands protection thing is that is a something totally different versions. This seemed a little bit different than that I mean that that I guess you could convert into company its base in the Cayman Islands but there are there. Tax havens around the world or just countries like Ireland most notably the country where their corporate tax rate is much lower than America a separate American company. Where you're looking at 835% tax rate. You might say well on the emerged with a company is facing Ireland where the corporate tax rate I believe his is under 15%. And all of a sudden you've just you know Cuddy he took of your tax bill. And this is totally illegal and at this point that we have a I don't when and I don't Iraq covering Capitol Hill right now but I mean other changes in the works the rats that like this from happening. There there actually is some legislation in the works President Obama and its transportation bill. I'm think included something in there that would. Encourage and actually forced companies to repatriate to bring back all their profits overseas. At a 14% tax rate. There are other bills are pending. That have been discussed in some bipartisan support for this to bring corporate taxes back from overseas did the big issue here. As that company's. Can legally avoid these taxes and it's up to congress to change the rules to either make it illegal to do an aversion which would be difficult thing to get past. Or to make it. So that companies. Aren't incentivized. To keep their money overseas and that's so in addition to this and there's also real estate investment trust right. Yeah this is again corporate tax structure that it's perfectly legal again yet you have some certain companies that like Sears right now actually is isn't in. The fact turning itself into a real estate investment trust they haven't officially done it yet but this company basically they're saying. All our assets are really about managing. Our buildings are real estate. And so if if your in the business of managing real estate there is a tax structure called to me which you allows you to do you that and pay a much lower tax rate. Then again at 35% tax rate which is. That's what that the rate that corporations would pay if there weren't any other tax loopholes but there are a lot of and so. Evil corporations that don't convert or don't. Turn themselves into reits are paying much lower than 35% tax rate I love the fact that you even a carry Alison this is all complete. Illegal which I know that it is at an end in I'm not at all holding U2 has been it's just very interesting that the theory it's funny that we have to say there is all completely legal. What's -- things a little you know. Anyway so we know. We know as individuals the tax code has gotten incredibly complex and and you know that it's stacked this hide nor can make sense that it had a lot of the tax code has been written by corporate lobbyists. Who written in a way that's makes it easier for corporations or may and legal for corporations. To evade US taxes again I don't blame the corporations they're they're following a law. Apple. Tim Cook you know he was called before congress last year about this he basically said hey if you don't if you congress doesn't like what I. As a CEO of apple and doing to change the law but right now I'm not not doing anything illegal and I have to be sympathetic. To the CEOs because their job is to maximize profits for shareholders. And again congress is giving them the out to do that right whether NFL and ask you about that is that all about prayer pressure from shareholders then. And again the day it isn't up pressure from shareholders because of corporate taxes it it did they can be a big chunk of money for these corporations. So. There's there's over two trillion with a T two trillion dollars. Of profits as you've corporations that are currently sitting overseas and the reason or not bring it back is because if they bring it back they would have to pay a 35% tax rate. On T plus trillion dollars so. If you're the CEO or the CFO the major corporations say well that's going to be a big hit a big check and then have to write right now somebody keep the money overseas. It's money that doesn't go to Uncle Sam. And it's money that isn't being used to let's just say build bridges or. Put it a fill potholes or build new airports in America it's a huge problem because we have infrastructure crisis in this country. And there's a lot of money that should be eagle and Uncle Sam that's not going Uncle Sam but again congress is making it legal. For corporations to the news anything else that I mean with those tax receipts expected this fall expected to fall that there anything up the government can do the treasurer are to make it harder to claim that tax residence abroad. Well. What happened last year was if you remember when burger king and Tim Horton when that deal got struck there was a lot of politicians to say we can't have this happen Burger King the great American company. And they can't become a Canadian based company in order to where taxes so the president and the Treasury Secretary have tried to you try to use moral suasion tried that. In a use the soap box to say this is wrong is anti American for corporations to do this but again. Unless they change the law you're gonna see more corporations do you do these kind of conversions or converting themselves to reads or just keeping their money parked overseas. Because it's better for the company and better for shareholders for them to do that all right Aaron task from Yahoo! finance there thank you so much appreciate it. Keep up let's have leverage here on abcnews.com you watch the big number I'm Dan that's where New York.

This transcript has been automatically generated and may not be 100% accurate.

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