A long-term decline in the number of the world's largest companies headquartered in the United States has stabilized and, to an extent, reversed over the past several years. Specifically, the number of Fortune Global 500 companies — the 500 largest companies by revenue in the world — headquartered in the U.S. declined from 179 in 2000 to 124 in 2022. The number of U.S.-headquartered companies was 121 in 2019 and 2020 and rose 122 in 2021, and 124 in 2022.
The long-term decline in the number of FG500 companies headquartered in the U.S. occurred amid a trend of lower statutory corporate income tax rates outside the U.S. The average statutory corporate income tax rate of non-U.S.-headquartered FG500 companies declined from 39.2% in 2000 to 25.2% in 2022, including both national and subnational corporate income taxes.
Before the Tax Cuts and Jobs Act was enacted in December 2017, the top U.S. statutory corporate income tax rate had remained essentially unchanged since 2000 at approximately 39% (including both the federal rate and a weighted average state corporate income tax rate). Enactment of the TCJA reduced the top federal rate to 21%, which lowered the top combined federal-state rate to 25.8%. The TCJA also strengthened the rules around corporate inversions.
Many factors can affect a company's choice of headquarters location, such as a country's regional economic growth and stability, local infrastructure, regulatory environment, labor availability and productivity, transportation and other input costs, and tax policies.
Other notable trends include:
- The number of FG500 companies that are headquartered in G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, the U.S. and EU member countries), declined from 420 in 2000 to 291 in 2022.
- A significant driver of the FG500 changes in headquarters' locations is the growing presence of China. Between 2000 and 2022, the number of FG500 companies with their headquarters in mainland China and Hong Kong grew from 10 to 136. Notably, in 2022, mainland China and Hong Kong for the third consecutive year surpassed the U.S. with the highest number of FG500 headquarters. Much of this is due to the growth of mainland China's and Hong Kong's state-owned enterprises, 88 of which were in the FG500 in 2022 compared to nine in 2000.
- Several large economies reduced their top statutory corporate income tax rates significantly between 2000 and 2022:
- The top statutory corporate income tax rate in five large economies declined by: 22.2 percentage points in Germany, 17.1 percentage points in Canada, 13.6 percentage points in Japan, 11.0 percentage points in the United Kingdom and 9.2 percentage points in the Netherlands.
- Japan reduced its top statutory corporate income tax rate from 43.3% in 2000 to 29.7% in 2022. Although Japan was still home to the third-highest number of FG500 companies in 2022, the number of FG500 companies headquartered in Japan fell from 107 to 47 during this period, in part, due to years of slow economic growth.
Table 1: Headquarters locations of FG500 companies, 2000 and 2022
*The United States is excluded from the calculations of the "Top 10" and "Global 500" tax rate averages to facilitate comparing each grouping to the United States.
Note: The top 10 locations are ranked by total number of headquarters in the 2022 FG500. The "corporate income tax rate" is the top statutory corporate income tax rate, including both national and subnational corporate income taxes. Tax rates for the "Top 10," "Other" and "Global 500" groupings are all averages weighted by the number of FG500 companies headquartered in each location. Each year's FG500 is based on revenue from each company's most recent fiscal year ended on or before March 31.
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Figure 1: U.S.-headquartered FG500 companies and U.S. corporate income tax rate
Note: Each year's FG500 is based on revenue from each company's most recent fiscal year ended on or before March 31. This analysis compares the FG500 to prior-year corporate income tax rates. For example, FG500 2022 is compared to the U.S. corporate income tax rate in 2021. Before the TCJA was enacted at the end of 2017, the top U.S. statutory corporate income tax rate had remained essentially unchanged since 2000 at approximately 39% (including both the federal rate and a weighted average state corporate income tax rate). Enactment of the TCJA reduced the top federal rate to 21% and the top combined federal-state rate to 25.8% and also put in place additional anti-inversion rules. Many factors can affect a company's choice of headquarters location, such as a country's regional economic growth and stability, local infrastructure, regulatory environment, labor availability and productivity, transportation and other input costs, and tax policies.
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A significant driver of the change in headquarters locations for the FG500 is the growing presence of China. Between 2000 and 2022, the number of FG500 companies with their headquarters in mainland China and Hong Kong grew from 10 to 136. During the same period, the number of FG500 companies headquartered in G-7 countries declined from 420 to 291. Similarly, the number of FG500 companies headquartered in OECD member countries declined from 480 in 2000 to 312 in 2022, and the number of FG500 companies headquartered in the U.S. declined from 179 to 124. (The OECD member countries are Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the U.K. and the U.S.)
A notable share of reductions in company headquarters in G7 and OECD countries between 2000 and 2022 is attributable to declines in the U.S. (a decline of 55 headquarters) and Japan (a decline of 60 headquarters). These two countries accounted for 115 of the 129 headquarters lost in G7 countries and of the 168 lost in OECD countries from 2000 through 2021.
Industry composition of FG500 companies
FG500 companies are categorized into eight industries, and this analysis compared the change in industry distribution between 2000 and 2022. In 2022, 22% of FG500 companies were in the financial and professional services industries, which include banks and insurers. That's down from 27% in 2000. The following industries also experienced declines in their shares of FG500 companies: retail and consumer products (four percentage points); energy, utilities and chemicals (one percentage point); industrial products (three percentage points); and "other," a catch-all category (five percentage points). Increases occurred in: technology, communications and entertainment (two percentage points); wholesale/trade (eight percentage points); and natural resources (seven percentage points).
China's state-owned enterprises comprised more than 20% of FG500 companies, helping explain China's ascendance. In 2022, 116 of the FG500 companies are SOEs. This is a significant increase from the 27 SOEs in the FG500 in 2000. Mainland China and Hong Kong account for a majority of these SOEs. Eighty-eight of the 116 SOEs (76% of SOEs) were headquartered in mainland China and Hong Kong in 2022. By comparison, in 2000, only nine of the 27 SOEs (33% of SOEs) were headquartered in mainland China and Hong Kong. Outside of mainland China and Hong Kong, SOEs in the FG500 are split between OECD (10 SOEs) and non-OECD (18 SOEs) countries. SOEs account for $10.4 trillion, or 27.5%, of the $37.8 trillion in 2022 FG500 company revenue.
Location of FG500 headquarters within the U.S.
In 2022, 124, or 25%, of the FG500 headquarters are located in the U.S. The four U.S. states with the most FG500 headquarters are: (1) New York (18 headquarters), Texas (15 headquarters), and California and Illinois (each with 12 headquarters). These states account for 57, or 46%, of the 124 of FG500 headquarters located in the U.S. Of the 50 states plus the District of Columbia, 22 states have no FG500 headquarters, nine states have 1 FG500 headquarters and four states have two FG500 headquarters.
The U.S. cities with the most FG500 headquarters are: (1) New York City (16 headquarters), (2) Houston (five headquarters), and Atlanta and Chicago (each with four headquarters). These cities account for 29, or 23%, of the 124 FG500 headquarters in the U.S.
Company headquarters' locations have been in flux for the past 20 years. Historically, changes in location reflect a variety of factors, including tax considerations, the rise and fall of national economies, changes in financing arrangements, merger and acquisition activity, changes in transportation and production technologies, changes in supply chains and changes in consumer tastes, to name a few. The pandemic, the resulting global economic uncertainty, and governments' economic and tax policy responses add more complexity to where the top FG500 company headquarters are located. Industry groups and policymakers need to be keenly aware of the many factors that can play into headquarters location decisions and consider the implications of significant shifts of large headquarters into or out of their local economies.
