To understand taxes, you have to think about geography. Don't worry, this will make sense eventually.
The U.S. has high corporate taxes compared with other developed countries. That means companies that make most of their money inside the U.S. pay more in taxes than companies that do a lot of business overseas.
Retailers, utilities, health insurance companies have relatively high tax bills for those reasons, while technology companies, pharmaceuticals makers and energy companies can make a lot more money in other countries.
On paper, the top federal corporate tax rate in the U.S. is 35 percent. Companies generally don't pay that much, but they can have dramatically different tax bills depending on where they make their money.
Take Macy's, Wal-Mart and Nike, all retailers. Macy's, a department store operator, makes all of its revenue in the U.S., according to FactSet, while Wal-Mart gets about a quarter of its revenue outside the U.S. and Nike makes almost 60 percent of its sales in countries other than the U.S. That's one important reason Macy's pays higher taxes.
FactSet says that over the last five years, Macy's average effective tax rate, or the percentage of its net income that it pays in state and federal taxes, has been more than 35 percent. Wal-Mart's tax rate was 31.5 percent and Nike's tax bill was around 23 percent.
TECH AND DRUG COMPANIES
Alphabet, Google's parent company, had an effective tax rate of 19 percent over that five-year period and IBM's rate was 18 percent. Both companies get most of their revenue outside the U.S.
Prescription drug distributor AmerisourceBergen is also entirely U.S.-based, and it had a tax rate that topped 50 percent over that period, but Gilead Sciences, a biotech drug manufacturer that gets a lot of revenue from other countries, paid less than half that much.
TAXING BY TERRITORY
JPMorgan calculates that most corporations pay a rate closer to 20 percent because of a wide variety of tax credits, tax reduction strategies, and those lower taxes on earnings from outside the U.S. The Trump administration is proposing cutting the top corporate tax rate to 15 percent, and it wants a "territorial" system where only profits made in the U.S. are taxed.
Because of the higher tax rates in the U.S., companies are motivated to say as much of their income is made outside the country as possible. If their products are made in another country, or assembled there, or will shipped there, or if they have a licensing deal with a non-U.S. company, the company may say that income comes from outside the U.S. so it can pay a lower tax rate.
BRINGING IT HOME
Companies that earn money overseas don't want to pay the U.S. rates on top of the foreign taxes they've already paid. As a result, money they earn overseas often stays parked in banks and businesses outside the country. Major companies like Apple have billions of dollars sitting outside the country, and the ability to bring that money back to the U.S. without worrying about a big tax bill might be far more significant than a tax cut.
"The tax cut is very important for principally domestic companies, but for these multinationals it's not nearly as important as the repatriation opportunity," said Bob Willens, a CPA who teaches a course on corporate tax policy as Columbia Business School.
If those companies pay a one-time tax on all of those earnings and then don't have to pay U.S. taxes on the money they make overseas in the future, they could invest in their businesses by buying more equipment, return money to investors by buying more stock and paying bigger dividends, or acquiring other companies. All of those moves could boost stock prices.