The centerpiece of presumptive Republican presidential candidate Sen. John McCain’s economic agenda is massive tax breaks for the wealthiest individuals and corporations in the United States. The cost to the federal budget: an estimated $300 billion a year, according to the Center for American Progress Action Fund’s analysis of the McCain campaign’s public materials.
Almost twothirds of these tax breaks, about $175 billion a year, will flow to U.S. corporations, including $45 billion for the 200 most profitable companies in America. When the United States faces so many urgent challenges, at home and abroad, delivering tens of billions of dollars to the most competitive U.S. companies is a particularly egregious misuse of public resources.
Specifically, under the tax plan offered by McCain (RAZ):
 The largest 200 corporations (as identified by Fortune magazine) in America would get a combined $45 billionayear tax break.1 These companies earned more than $500 billion in profits in 2007.
 Eight companies—WalMart Stores Inc., ExxonMobil Corp, ConocoPhillips Co., Bank of America Corp., AT&T, Berkshire Hathaway Inc., JPMorgan Chase & Co., and Microsoft Corp—would each receive over $1 billion a year.
 Like the earmarks McCain criticizes, the corporate tax breaks would “restrict America’s ability to address genuine national priorities.”.2 This $45 billion, for example, would more than pay for key antipoverty steps, including cutting taxes on lowincome workers and families and expanding federal assistance for childcare. Using this $45 billion more wisely we would lift more than 9 million people out of poverty.3
McCain’s Tax Plan
McCain has proposed $300 billion a year in four large tax breaks.4 First, he would slash the corporate tax rate to 25 percent from 35 percent. Second, he would allow corporations to immediately write off—or expense, in tax accounting terminology—the cost of corporate investments in equipment and technology. Third, he would repeal the Alternative Minimum Tax. Finally, he would double the exemption for dependents to $7,000.
The two corporate tax breaks are extremely expensive, costing the U.S. Treasury Department $100 billion and $75 billion a year, respectively. Corporate tax breaks are also extremely regressive. Corporate taxes are ultimately paid by investors, according to the longstanding view of the Treasury and the Congressional Budget Office. As a result, approximately 59 percent of these tax cuts would go to the top 1 percent of households. Only 11 percent of the benefit would go to the bottom 80 percent of households.
Finally, these corporate tax breaks are unlikely to help the economy. They drive up the federal budget deficit, resulting in higher interest rates and lower privatesector investment. Taxes paid by U.S. corporations are among the lowest in the world, measured as a share of the economy. And as Michigan University law professor Revuen AviYonah points out, “experience indi cates that corporate rate cuts, like the temporary reduction in the tax rate on dividends from foreign subsidiaries from 35 percent to 5.25 percent, have resulted in increased profits for U.S. corpora tions but no increase in jobs or overall economic growth.”5
The U.S. corporate tax code is in need of wholesale reform, not just more tax breaks. The nominal U.S. corporate tax rate is among the highest in the world, but actual taxes are among the lowest because of the large number of corporate tax shelters. A balanced reform that reduces the tax rate by removing tax preferences could strengthen the economy without driving up the federal budget deficit or making the U.S. tax code more regressive. But cutting corporate tax rates without taking on specialinterest tax breaks—as Sen. McCain wants to do if he becomes president—is an unwise giveaway to corporations.
Tax Cuts for the Fortune 200
The reduction in the corporate tax rate alone would cut taxes for America’s 200 largest companies by $45 billion a year. These companies’ 2007 profits exceeded $508 billion. The average Fortune 200 companies collected $2.5 billion in profits in 2007 (see Table 1 below).
The McCain tax plan also showers additional tax breaks on highly profitable industries (see Table 2 below). It includes $6.5 billion for Fortune 200 energy companies, $6.3 billion for Fortune 200 banks and financial institutions, and $5.6 billion for Fortune 200 merchandising and retailing companies.
These tax reductions are far larger than the earmarks McCain regularly criticizes. Earmarks total about $18 billion a year, according to Taxpayers for Common Sense.6 And there are only about $9 billion a year in wasteful earmarks that could be eliminated, according to the Heritage Foundation.7
In short, McCain’s tax breaks for the Fortune 200 alone amount to more than twice current annual earmarks and more than four times the amount of wasteful earmarks he could eliminate, as identified by a prominent conservative think tank.
Conclusion
Over the past eight years, U.S. corporate profits have grown along with the U.S. economy while workers’ wages have stagnated. But the centerpiece of Sen. McCain’s economic policies is a huge break of $300 billion to the nation’s wealthiest individuals and most profitable companies. These misdirected resources instead could be used to meet the needs of struggling families. For example, they could help lift more than 9 million families out of poverty.
Tax Breaks for the Fortune 200 Companies Under McCain’s Tax Plan  
Fortune Rank

Companys

2007 Worldwide Profits

2007 U.S. Taxes

Savings Under McCain

1  WalMart Stores  $13 billion  $5 billion  $1.4 billion 
2  Exxon Mobil  $41 billion  $4.6 billion  $1.3 billion 
3  Chevron  $19 billion  $1.4 billion  $400 million 
4  General Motors  39 billion  $380 million  $110 million 
5  ConocoPhillips  $12 billion  $4 billion  $1.1 billion 
6  General Electric  $22 billion  $87 million  $25 million 
7  Ford Motor  $2.7 billion  *  * 
8  Citigroup  $3.6 billion  *  * 
9  Bank of America Corp.  $15 billion  $4.5 billion  $1.3 billion 
10  AT&T  $12 billion  $5.5 billion  $1.6 billion 
11  Berkshire Hathaway  $13 billion  $6.6 billion  $1.9 billion 
12  J.P. Morgan Chase & Co.  $15 billion  $3.9 billion  $1.1 billion 
13  American International Group  $6.2 billion  $1.5 billion  $400 million 
14  HewlettPackard  $7.3 billion  $870 million  $250 million 
15  International Business Machines  $10 billion  $1.1 billion  $310 million 
16  Valero Energy  $5.2 billion  $1.8 billion  $500 million 
17  Verizon Communications  $5.5 billion  $3 billion  $850 million 
18  McKesson  $910 million  $370 million  $100 million 
19  Cardinal Health  $1.9 billion  $300 million  $85 million 
20  Goldman Sachs Group  $12 billion  $3 billion  $870 million 
21  Morgan Stanley  $3.2 billion  *  * 
22  Home Depot  $4.4 billion  $1.8 billion  $520 million 
23  Procter & Gamble  $10 billion  $2.9 billion  $830 million 
24  CVS Caremark  $2.7 million  $1.5 million  $400 million 
25  UnitedHealth Group  $4.7 billion  $2.5 billion  $710 million 
26  Kroger  $1.2 billion  $730 million  $210 million 
27  Boeing  $4.1 billion  $1.7 billion  $500 million 
28  AmerisourceBergen  $470 million  $260 million  $74 million 
29  Costco Wholesale  $1.1 billion  $400 million  $115 million 
30  Merrill Lynch  $7.8 billion  *  * 
31  Target  $2.8 billion  $1.5 million  $430 million 
32  State Farm Insurance Cos.  $5.5 billion  **  ** 
33  WellPoint  $3.3 billion  $1.8 billion  $500 million 
34  Dell  $2.9 billion  $600 million  $170 million 
35  Johnson & Johnson  $11 billion  $2.2 billion  $630 million 
36  Marathon Oil  $4 billion  $1.3 billion  $370 million 
37  Lehman Brothers Holdings  $4.2 billion  $530 million  $150 million 
38  Wachovia Corp.  $6.3 billion  $2.1 billion  $590 million 
39  United Technologies  $4.2 billion  $430 million  $120 million 
40  Walgreen  $2 billion  $1 billion  $300 million 
41  Wells Fargo  $8.1 billion  $3.1 billion  $900 million 
42  Dow Chemical  $2.9 billion  $220 million  $60 million 
43  MetLife  $4.3 billion  $300 million  $85 million 
44  Microsoft  $14 billion  $4.9 billion  $1.4 billion 
45  Sears Holdings  $830 million  $330 million  $94 million 
46  United Parcel Service  $390 million  *  * 
47  Pfizer  $8.1 billion  *  * 
48  Lowe’s  $2.8 billion  $1.5 billion  $430 million 
49  Time Warner  $4.4 billion  $1.7 billion  $500 million 
50  Caterpillar  $3.5 billion  $920 million  $260 million 
51  Medco Health Solutions  $910 million  $480 million  $130 million 
52  Archer Daniels Midland  $2.2 billion  $670 million  $190 million 
53  Fannie Mae  $2.1 billion  *  * 
54  Freddie Mac  $3.1 billion  *  * 
55  Safeway  $890 million  $370 million  $110 million 
56  Sunoco  $890 million  $400 million  $120 million 
57  Lockheed Martin  $3.0 billion  $1.3 billion  $370 million 
58  Sprint Nextel  $29 million  $130 million  $37 million 
59  PepsiCo  $5.7 billion  $1.4 billion  $410 million 
60  Intel  $7 billion  $1.7 billion  $490 million 
61  Altria Group  $9.8 billion  $2 billion  $590 million 
62  Supervalu  $450 million  $320 million  $92 million 
63  Kraft Foods  $2.6 billion  $420 million  $120 million 
64  Allstate  $4.6 billion  $2 billion  $580 million 
65  Motorola  $49 million  *  * 
66  Best Buy  $1.4 billion  $660 million  $190 million 
67  Walt Disney  $4.7 billion  $2.3 billion  $640 million 
68  FedEx  $2 billion  $920 million  $260 million 
69  Ingram Micro  $280 million  $50 million  $14 million 
70  Sysco  $1 billion  $540 million  $150 million 
71  Cisco Systems  $7.3 billion  $1.4 billion  $410 million 
72  Johnson Controls  $1.3 billion  $30 million  $9 million 
73  Honeywell International  $2.4 billion  $470 million  $140 million 
74  Prudential Financial  $3.7 billion  $520 million  $150 million 
75  American Express  $4 billion  $35 million  $10 million 
76  Northrop Grumman  $1.8 billion  $670 million  $190 million 
77  Hess  $1.8 billion  $60 million  $18 million 
78  GMAC  $2.3 billion  $380 million  $110 million 
79  Comcast  $2.6 billion  $1.4 billion  $400 million 
80  Alcoa  $2.6 billion  $700 million  $200 million 
81  DuPont  $3 billion  $420 million  $120 million 
82  New York Life Insurance  $1.1 billion  $110 million  $33 million 
83  CocaCola  $6 billion  $760 million  $220 million 
84  News Corp.  $3.4 billion  $280 million  $80 million 
85  Aetna  $1.8 billion  $900 million  $260 million 
86  TIAACREF  $1.4 billion  **  ** 
87  General Dynamics  $2 billion  $850 million  $240 million 
88  Tyson Foods  $270 million  $130 million  $40 million 
89  HCA  $870 million  $180 million  $50 million 
90  Enterprise GP Holdings  $110 million  $8 million  $2 million 
91  Macy’s  $890 million  $360 million  $100 million 
92  Delphi  $3 billion  *  * 
93  Travelers Cos.  $4.6 billion  $1.5 billion  $430 million 
94  Liberty Mutual Insurance Group  $1.5 billion  $550 million  $160 million 
95  Hartford Financial Services  $2.9 billion  $910 million  $260 million 
96  Abbott Laboratories  $3.6 billion  $540 million  $160 million 
97  Washington Mutual  $67 million  $300 million  $85 million 
98  Humana  $830 million  $220 million  $60 million 
99  Massachusetts Mutual Life Insurance  $720 million  $180 million  $50 million 
100  3M  $4 billion  $900 million  $260 million 
101  Merck  $3.2 billion  *  * 
102  Deere  $1.8 billion  $480 million  $140 million 
103  Apple  $3.5 billion  $1.3 billion  $370 million 
104  Countrywide Financial  $700 million  *  * 
105  Tech Data  $110 million  $44 million  $13 million 
106  McDonald’s  $2.4 billion  $470 million  $130 million 
107  Publix Super Markets  $1.2 billion  $620 million  $180 million 
108  Nationwide  $2 billion  $190 million  $50 million 
109  AMR  $500 million  $170 million  $50 million 
110  Northwestern Mutual  $1 billion  $21 million  $6 million 
111  Emerson Electric  $2 billion  $420 million  $120 million 
112  Raytheon  $2.6 billion  $500 million  $140 million 
113  Wyeth  $4.6 billion  $940 million  $270 million 
114  International Paper  $1.2 billion  $230 million  $70 million 
115  Electronic Data Systems  $720 million  $180 million  $50 million 
116  Tesoro  $570 million  $280 million  $80 million 
117  Constellation Energy  $820 million  $350 million  $100 million 
118  CocaCola Enterprises  $710 million  $110 million  $30 million 
119  Goodyear Tire & Rubber  $600 million  $3 million  $1 million 
120  Manpower  $480 million  $50 million  $13 million 
121  Plains All American Pipeline  $360 million  ***  *** 
122  U.S. Bancorp  $4 billion  $1.6 billion  $470 million 
123  Occidental Petroleum  $5.4 billion  $1.4 billion  $410 million 
124  UAL  $400 million  $30 million  $90 million 
125  BristolMyers Squibb  $2 billion  $110 million  $30 million 
126  J.C. Penney  $1.1 billion  $530 million  $150 million 
127  Whirlpool  $640 million  $0  $0 
128  Staples  $1 billion  $400 million  $115 million 
129  Delta Air Lines  $1.6 billion  *  * 
130  Capital One Financial  $1.6 billion  1.1 billion  $330 million 
131  Exelon  $2.7 billion  $2.7 billion  $780 million 
132  TJX  $770 million  $310 million  $90 million 
133  Eli Lilly  $3 billion  $540 million  $160 million 
134  Murphy Oil  $770 million  $140 million  $40 million 
135  Express Scripts  $570 million  $1.3 billion  $360 million 
136  KimberlyClark  $1.8 billion  $220 million  $60 million 
137  Oracle  $4 billion  $920 million  $260 million 
138  AutoNation  $280 million  $150 million  $45 million 
139  Loews  $2.5 billion  $1.3 billion  $370 million 
140  FreeportMcMoRan Copper & Gold  $3 billion  $160 million  $50 million 
141  Cigna  $1 billion  $460 million  $130 million 
142  Rite Aid  $27 million  $730 million  $210 million 
143  DirecTV Group  $1.4 billion  ***  *** 
144  Xerox  $1 million  $120 million  $40 million 
145  CHS  $750 million  $30 million  $8 million 
146  United States Steel  $880 million  $130 million  $40 million 
147  Weyerhaeuser  $790 million  $36 million  $10 million 
148  Fluor  $530 million  $400 thousand  $110 thousand 
149  AnheuserBusch  $2.1 billion  $800 million  $230 million 
150  $4.2 billion  $520 million  $150 million  
151  Nucor  $1.5 billion  $700 million  $200 million 
152  Kohl’s  $1 billion  $590 million  $170 million 
153  Nike  $1.5 billion  $390 million  $110 million 
154  Union Pacific  $1.9 billion  $1.2 billion  $340 million 
155  Illinois Tool Works  $1.9 billion  $490 million  $140 million 
156  Bear Stearns  $230 million  **  ** 
157  Lear  $240 million  $21 million  $6 million 
158  Arrow Electronics  $410 million  $95 million  $30 million 
159  Anadarko Petroleum  $3.8 billion  *  * 
160  Burlington Northern Santa Fe  $1.8 billion  $990 million  $280 million 
161  Dominion Resources  $2.5 billion  $1.6 billion  $460 million 
162  Gap  $830 million  $370 million  $110 million 
163  Avnet  $390 million  $85 million  $25 million 
164  Office Depot  $400 million  $120 million  $35 million 
165  AFLAC  $1.6 billion  $190 million  $55 million 
166  Southern  $1.7 billion  $730 million  $210 million 
167  Halliburton  $3.5 billion  *  * 
168  FPL Group  $1.3 billion  $310 million  $90 million 
169  Paccar  $1.2 billion  $160 million  $50 million 
170  Computer Sciences  $390 million  $180 million  $52 million 
171  Amazon.com  $480 million  $180 million  $50 million 
172  Bank of New York Mellon Corp.  $2 billion  $700 million  $200 million 
173  Amgen  $3.1 billion  $600 million  $170 million 
174  TRW Automotive Holdings  $90 million  *  * 
175  Progressive  $1.2 billion  $500 million  $140 million 
176  United Services Automobile Assn.  $1.9 billion  **  ** 
177  Centex  $270 million  *  * 
178  Continental Airlines  $460 million  $200 million  $57 million 
179  Health Net  $190 million  $150 million  $43 million 
180  Chubb  $2.8 billion  $960 million  $280 million 
181  CBS  $1.2 billion  $690 million  $200 million 
182  L3 Communications  $760 million  $320 million  $90 million 
183  AES  $95 million  $7 million  $2 million 
184  Sun Microsystems  $473 million  *  * 
185  Texas Instruments  $2.7 billion  $770 million  $220 million 
186  ColgatePalmolive  $1.7 billion  $270 million  $78 million 
187  Qwest Communications  $2.9 billion  $140 million  $41 million 
188  World Fuel Services  $65 million  $4 million  $1 million 
189  Toys ‘R’ Us  $65 million  $32 million  $9 million 
190  Pepsi Bottling  $530 million  $130 million  $36 million 
191  Viacom  $1.8 billion  $660 million  $190 million 
192  Oneok  $300 million  $160 million  $45 million 
193  SunTrust Banks  $1.6 billion  $590 million  $170 million 
194  Penske Automotive Group  $130 million  $30 million  $9 million 
195  Consolidated Edison  $230 million  $360 million  $100 million 
196  American Electric Power  $1 billion  $500 million  $140 million 
197  Marriott International  $700 million  $310 million  $90 million 
198  Public Service Enterprise Group  $1.3 billion  $840 million  $240 million 
199  Waste Management  $1.2 billion  $500 million  $140 million 
200  PG&E Corp.  $1 billion  $445 million  $130 million 
TOTAL  $508 billion  $44.5 billion 
Tax Breaks by Corporate Sector Under McCain’s Tax Plan  
Fortune 200 Companies by Sector  McCain Tax Cut 
Energy, Oil & Utilities  $6.5 billion 
Banks & Finance  $6.3 billion 
Merchandising/Retail  $5.6 billion 
Insurance  $5.0 billion 
Media & Telecom  $4.5 billion 
Computing & IT  $4.3 billion 
Health Care  $4.0 billion 
Heavy Industry  $3.1 billion 
Consumer Goods  $2.0 billion 
Food & Agriculture  $1.7 billion 
Misc. Services  $1.0 billion 
Transport Services  $1.0 billion 
Methodology
The estimates of corporate savings were calculated based upon information presented in the companies’ most recent 10K filings with the Securities and Exchange Commission, which include audited financial statements.8 The figures reported on tax returns—which are not made public—may differ because corporations employ different methodologies for calculating income for accounting and tax purposes. The estimates are based on the financial statements’ reported current and deferred taxes paid in 2007 to the federal government for income earned from U.S. operations.
The figures present each corporation’s estimated savings from reducing the corporate tax to 25 percent from 35 percent. They do not include savings from Sen. McCain’s expensing proposal because there is no reliable way to estimate how those savings will be distributed across companies. They also exclude U.S. taxes on income earned from foreign operations. Finally, the figures do not include any offsetting tax increases resulting from McCain’s promise to eliminate corporate tax subsidies because the campaign has not presented specific proposals.
Several companies reported that 2007 taxes were negative (known as a “tax asset”). Companies with a “net operating loss” can use those losses to offset profits earned in the prior two years and receive a refund of taxes paid in those years. Net operating losses can be caused by business factors or by tax subsidies such as accelerated depreciation. Presumably the McCain proposal would not alter corporations’ ability to use net operating losses to offset prior years’ tax bills, and therefore these companies’ potential savings under the McCain plan are assumed to be zero.
The estimates are based on 2007 figures. The actual effect of the McCain proposals will depend on corporations’ future performance. Figures may not add due to rounding.
Endnotes
1. As identified by Fortune magazine. Fortune, “Fortune 1000,” May 5, 2008.
2.John McCain, “McCain Tax Cut Plan,” John McCain for President 2008.
3.The Center for American Progress Task Force on Poverty, “From Poverty to Prosperity: A National Strategy to Cut Poverty in Half” (Washington: Center for American Progress, 2007).
4.Based on information publicly available from the McCain campaign website and news accounts. The Tax Policy Center has recently released an analysis of McCain’s plan, apparently based on new information from the McCain campaign that clarifies and in at least one instance contradicts the campaign’s public policy documents. Our analysis continues to rely on the public materials, which we regard as authoritative.
5.Reuven AviYonah, “John McCain’s Corporate Tax Agenda: A Critical Examination” (Washington: Center for American Progress Action Fund, 2008).
6.Taxpayers for Common Sense, “Taxpayers for Common Sense Releases New Earmark Database,” February 14, 2008.
7.Michael Dobbs, “McCain’s Fantasy War on Earmarks,” Washington Post, May 23, 2008.
8.Financial data compiled from “Form 10K: Notes to Consolidated Financial Statement,” SEC filing of each company. Please see individual company websites for further details on filings.