Nearly All Mid-sized Corps in Big Three US States (NY, CA and TX) Have Paid Modest State Corporate Income Tax

My earlier post summarized effective State and Local Corporate Income Tax Rates Paid by the 370 Most Profitable US Big Corps, which generated Core Pretax Income in excess of $5 bil for the most recent 12 years. My definition of Core Pretax Income excludes large Asset Impairment Charges, like ones resulting from the Ceiling Test for Oil and Gas companies, and from Goodwill Impairment for companies in all industries. It also excludes Acquired In Process R&D Charges.

When I stratify this research, it is pretty clear that the largest, most profitable Corps have the lowest effective Corporate State Income Tax Rates Paid.

The top 20%, or the top 74 Big Corps with the highest Pretax Income, represented a much more substantial 63% of the Total Core Pretax Income for all 370 Big Corps.

In the past decade, the very Big US Corps have gotten so much bigger, relative to the rest of the Big Corps. This trend is especially prevalent in the Big Oil sector, but it is also the case, to a somewhat lesser degree, with the very Big Corps in many other sectors.

Here’s a stratification of the weighted average effective Corporate State and Local Income Tax Rate Paid by these 370 very profitable Big Corps:

.....Top 20% of Big Corps………....2.11%
.....Second 20% of Big Corps…….2.50%
.....Middle 20% of Big Corps……..2.94%
.....Fourth 20% of Big Corps……..2.95%
.....Bottom 20% of Big Corps…….2.62%

The above trend makes sense to me, except for the Bottom 20% effective tax rate dropping by a bit. The very Big Corps have a very extensive list of exceptionally qualified, creative state tax strategists, both inside and outside their firms. Also, the very Big Corps have a higher portion of their earnings generated overseas.

I am interested to see what happens with the effective tax rates for the Medium-sized Corps, which earn just below that of the top most profitable 370 firms above. Thus, I will now be researching here Medium-sized Corps, which I am defining as publicly-held US Corps which generated at least $2 bil in Total Core Pretax Income in the most recent 6 years, and which are not already included in the top 370 most profitable very Big Corps.

I will start this new research by focusing on the Big Three US States…..New York, Texas, and California. Here’s a brief summary of my earlier research results for the very Big Corps in these three states, and for all US States.

......................................Most Recent Twelve Years
..............................#....State&Local.......................Effective
.............................of......Corporate........Core......State&Local
.............................Big.......Income.........Pretax......Tax Rate
.......State.............Corps....Tax Paid.......Income........Paid
...........................................(Millions of Dollars)

New York...............45.......42,291......1,583,149......2.67%
Texas.....................44........19,743.....1,377,291......1.43%
California...............41........31,961.....1,175,517......2.72%
Total of Big Three..130…….93,995……4,135,957……2.27%
Remainder of US...242……111,976……4,813,345……2.33%
All of US……….......370……205,971…..8,949,302…..2.30%

In comparison to the above effective tax rates paid, the current statutory Corporate State Income Tax Rates for NY is 7.10%, for California is 8.84%, and for the entire US is an average 7.39%. Texas does not have a state corporate income tax, although it does have a Gross Margins tax.

Now, here is a State Summary of my new research for Medium-sized Corps, with Core Pretax Income (PTI) above $2 bil for the most recent 6 years in these three Big US States. Since in my research, I found many Texas Mid-sized Corps with Core Pretax Income just under $2 bil, I also added them here.

.........................................Most Recent Six Years
..............................# of......State&Local......(PTI).........Effective
............................Medium...Corporate........Core......State&Local
...............................Size.......Income.........Pretax.......Tax Rate
.......State................Corps.....Tax Paid.......Income.........Paid
..............................................(Millions of Dollars)

..California.................15........1,217............45,285.........2.69%
..New York.................15........1,272...........48,637.........2.62%
..Texas
......PTI > $2 Bil..........19...........912............52,461.........1.74%
......PTI $1.5-$2 Bil.....17..........589............30,254.........1.95%

Total Big Three States..66…….3,990……....176,637……...2.26%

And below here are the individual 66 Medium-sized Corps in each of these three Big US States:

..........................................Most Recent Six Years
.........................................State&Local....(PTI).........Effective
.........................................Corporate........Core......State&Local
.......State............................Income.........Pretax......Tax Rate
....Corporations..................Tax Paid.......Income........Paid
.............................................(Millions of Dollars)

California with PTI > $2 bil for past 6 Years
DIRECTV................................200...........7,662.........2.61%
Western Digital...........................4...........4,027.........0.10%
DaVita.....................................161...........3,307.........4.87%
Agilent Technologies................83...........3,102.........2.68%
Reliance Steel & Aluminum.....122...........2,808.........4.34%
Ross Stores...............................92...........2,644.........3.48%
Juniper Networks.....................90...........2,644.........3.40%
Xilinx........................................24...........2,638.........0.91%
Jacobs Engineering.................109...........2,637.........4.13%
National Semiconductor...........43(1).......2,470.........1.74%
Lam Research...........................12...........2,428.........0.49%
Varian Medical Systems............72..........2,404.........3.00%
KLA Tencor..............................37...........2,333.........1.59%
Altera.......................................27...........2,112.........1.28%
Robert Half Intl.......................141...........2,069.........6.81%
CA Total for all 15 Corps.....1,217.........45,285.........2.69%


New York with PTI > $2 bil for past 6 Years
Corning...................................(13)..........8,423.........(0.15)%
AOL Inc(2006-2009)..............273..........4,542.........6.01%
Mastercard...............................93...........4,531.........2.05%
Arch Capital Group, Ltd(4).........5............3,445.........0.15%
Polo Ralph Lauren..................138...........3,365.........4.10%
CA............................................62...........3,324.........1.87%
Tiffany....................................130...........2,579.........5.04%
NYSE Euronext........................52...........2,504.........2.08%
Starwood Hotels & Resorts.....102...........2,477.........4.12%
Arrow Electronics....................49...........2,412.........2.03%
New York Community Bancorp.39..........2,375.........1.64%
Assurant(2004-2006)...............0(2).......2,288.........0.00%
Constellation Brands...............131...........2,267.........5.78%
National Fuel Gas.....................85...........2,085.........4.08%
NASDAQ OMX Group..............126...........2,020.........6.24%
NY Total for all 15 Corps....1,272........48,637.........2.62%

Texas with PTI > $2 bil for past 6 Years
Tesoro....................................203...........3,810.........5.33%
Plains Exploration&Production.65...........3,603.........1.80%
Temple Inland...........................60(3).......3,449.........1.74%
Affiliated Computer Services.....89...........3,442.........2.59%
El Paso........................................0...........3,197.........0.00%
Dr. Pepper Snapple Group........138...........3,154.........4.38%
Cameron International..............17...........3,067.........0.55%
Patterson UTI Energy................56...........2,937.........1.91%
Southwestern Energy..................0...........2,901.........0.00%
Rowan Companies.......................4...........2,777.........0.14%
HCC Insurance Holdings............24...........2,555.........0.94%
McDermott................................61...........2,517.........2.42%
Lyondell Chemical.....................13...........2,258.........0.58%
Pride International.....................0(2).......2,240.........0.00%
GameStop.................................52...........2,177..........2.39%
Ultra Petroleum..........................1...........2,172..........0.05%
Dean Foods...............................61...........2,116..........2.88%
Celanese...................................56(1).......2,046..........2.74%
FMC Technologies.....................12...........2,043..........0.59%
TX Total for all 19 Corps........912.........52,461..........1.74%

Texas with PTI from $1.5-$2.0 bil for past 6 Years
RadioShack...............................85...........1,971.........4.31%
Frontier Oil...............................77...........1,962.........3.92%
Helix Energy Solutions Group.....0(2).......1,948.........0.00%
Americredit..............................48(1).......1,921.........2.50%
BMC Software............................28...........1,905.........1.47%
Flowserve.................................14...........1,890.........0.74%
Denbury Resources...................20...........1,821.........1.10%
Cabot Oil&Gas...........................18...........1,765.........1.02%
EXCO Resources........................(1)..........1,761........(0.06)%
Whole Foods Market................176..........1,752.........10.05%
KBR.........................................(16)..........1,710........(0.94)%
Global SantaFe(2004-06)(5).......2...........1,702.........0.12%
Commercial Metals...................61...........1,701.........3.59%
Alliance Data Systems...............36...........1,687.........2.13%
Atmos Energy...........................44...........1,637.........2.69%
Grant Prideco.............................7(1).......1,583.........0.44%
Pioneer Natural Resources......(10)..........1,538.......(0.65)%
TX Total for 17 Corps...........589.........30,254.........1.95%

(1) Includes both Current State Income Tax Expense and Deferred State Income Tax Expense.
(2) No mention of any State Income Taxes, therefore I assumed none were paid.
(3) Also includes Foreign Income Tax Paid.
(4) Bermuda Corp, but with New York City CPA firm
(5) Was a Cayman Islands Corp, but with Houston SEC Business and Mailing Addresses. It had a Houston CPA firm. It was acquired by Transocean, Ltd.

The above list of 36 Texas Medium-sized Corps include 22 in the Oil and Gas Related Industries. The Houston metro area is home to 16 of these 22 companies. Clearly, Texas has prospered from the Big Oil industry, while the rest of the country has suffered in the 2000s Lost Decade.

It is pretty clear to me that Big Oil has just devastated the US economy in the past decade. While Big Oil earnings continued to go to the moon, and still do, other US businesses and all US individuals have been severely damaged economically by unnecessary sky-high energy costs.

To be fair, this all started when the Clinton Administration allowed Big Oil to merge. Big Oil continued to pick up steam during the years of the very friendly to Big Oil Bush/Cheney Presidency. When ExxonMobil, Chevron, and ConocoPhillips are this huge, they dominate and control much of US society, including the US government.

I think that unless the US Government effectively deals with the out-sized profits of Big Oil, there is going to be an unprecedented backlash from both financially desperate US citizens and US businesses. This isn't the way it should be....where Houston rocks while the rest of the country gets rolled!

More Than 95% of Most Profitable US Corps Have Paid Modest State and Local Income Taxes

From my quick SEC research, I found 374 US Publicly-held Companies with Core Pretax Income over $5 bil each for the most recent 12 years. These 374 Big Corps generated Total Core Pretax Income for the most recent 12 years of $9,013,703,000,000 (yeah, that's more than $9 trillion).

Of those 374 companies, four of them, which generated Core Pretax Income of $64.4 bil in the past 12 years, paid State Corporate Income Taxes, but they decided to not disclose sufficient information related to the amounts, and thus I wasn't able to derive a reasonable estimate of the amounts. These 4 Corps are shown at the very bottom of this report. That leaves 370 US Corps, which are all shown below.

These 370 US Corps generated $8,949,302,000,000 (yeah, that's more than $8.9 trillion) in Total Core Pretax Income over the most recent 12 years. The related weighted average effective Corporate State and Local Income Tax Rate Paid or Currently Payable was 2.30%.

These 370 US Corps are headquartered in 39 different US States. Of these 39 US States, four of them (Texas, Ohio, Washington, and Nevada) have no Corporate State Income Tax. The average statutory current State Tax Rate of the other 35 US States was 7.39%. Thus, the weighted average effective state and local corporate income tax rate paid of 2.30% was a huge 69% discount to the average current state tax rate of 7.39%.

Here's a US State Summary of the Effective State and Local Corporate Income Tax Rates Paid by the Most Profitable, Very Big US Corps, which are defined here as ones with Total Core Pretax Income from Continuing Operations of more than $5 bil each in the most recent 12 years. My definition of Core Pretax Income here excludes large Asset Impairment Charges, like those from Ceiling Tests for Oil and Gas companies, and those from Goodwill Impairment for companies in all industries. It also excludes large Acquired In Process Research and Development Charges.

.....................................Most Recent Twelve Years
.............................#....State&Local.......................Effective
............................of......Corporate........Core......State&Local
............................Big.......Income.........Pretax......Tax Rate
.......State............Corps....Tax Paid.......Income........Paid
..........................................(Millions of Dollars)

New York..............45........42,291......1,583,149......2.67%
Texas....................44........19,743......1,377,291......1.43%
California..............41.........31,961......1,175,517......2.72%
New Jersey...........18........12,217.........534,077......2.29%
Illinois..................24........10,960.........491,682......2.23%
North Carolina.......13........12,355.........395,255......3.13%
Connecticut.............9.........4,958.........354,085......1.40%
Washington.............9..........6,168.........324,385......1.90%
Georgia.................10..........8,543.........323,370......2.64%
Ohio......................17.........7,321..........321,950......2.27%
Minnesota.............14..........8,555.........309,056......2.77%
Pennsylvania.........17..........4,159.........209,556......1.98%
Arkansas.................4..........5,896.........208,554......2.83%
Nebraska................4...........2,209.........152,159......1.45%
Virginia..................9...........3,422.........132,009......2.59%
Michigan.................7..........1,752.........106,479......1.65%
Missouri..................8..........3,303.........101,428......3.26%
Indiana...................6..........1,280.........100,120......1.28%
Massachusetts.........9..........2,776..........93,135......2.98%
Florida....................7..........1,670..........81,018......2.06%
Maryland.................6..........2,751..........62,374......4.41%
Tennessee................5...........1,911..........61,981......3.08%
Oklahoma.................4.............387..........56,412......0.69%
Delaware..................2.............373..........51,833......0.72%
Wisconsin.................5..........1,560..........48,731......3.20%
Arizona....................4.............732..........43,768......1.67%
Rhode Island............2...........1,835..........35,715......5.14%
Kentucky..................5.............733..........34,562......2.12%
Oregon......................3.............831..........31,782......2.61%
Louisiana..................3.............413...........30,142......1.37%
Colorado...................4.............729..........29,940......2.43%
Alabama....................3............496...........21,876......2.27%
Iowa..........................2............438...........16,522......2.65%
Washington DC...........1............188...........11,749......1.60%
Nevada.......................2............221...........10,768.....2.05%
Idaho.........................1............356.............8,457......4.21%
Kansas........................1............352.............7,988......4.41%
Utah...........................1..............53.............5,345......0.99%
South Carolina............1..............73............5,082.......1.44%

Totals of 39 States...370.....205,971.....8,949,302......2.30%

And here is similar information for the individual 370 Most Profitable, Very Big Corps in each US State.

..........................................Most Recent Twelve Years
.........................................State&Local.....................Effective
.........................................Corporate........Core......State&Local
.......State............................Income.........Pretax......Tax Rate
....Corporations..................Tax Paid.......Income........Paid
.......................................(Millions of Dollars)

New York
Citigroup.............................4,081..........149,636.......2.73%
IBM.....................................1,510..........147,733.......1.02%
Altria Group........................4,371..........143,203.......3.05%
Verizon Communications....5,372..........133,814.......4.01%
Pfizer...................................1,920..........123,204.......1.56%
JP Morgan Chase.................4,289..........121,908.......3.52%
Goldman Sachs....................2,553...........90,605.......2.82%
Morgan Stanley...................2,652...........67,759.......3.91%
PepsiCo..................................868...........63,882.......1.36%
Bristol Myers Squibb..............392...........51,633.......0.76%
American Express..................990...........45,364.......2.18%
News Corp(2002-2009).........577...........31,894.......1.81%
Time Warner(1999-2009)....1,237...........28,134.......4.40%
MetLife...................................309...........28,117.......1.10%
Phillip Morris Intl(2007-09)..(15)...........28,064.....(0.05)%
Colgate-Palmolive...................286...........24,982.......1.14%
Hess......................................(123)..........22,786......(0.54)%
Bank of New York Mellon......1,183...........21,569.......5.48%
Loews......................................849...........21,180.......4.01%
CBS........................................1,299..........19,295.......6.73%
Viacom(2003-2009)................828...........15,544.......5.33%
Marsh & McLennan...................628...........13,961.......4.50%
Omnicom Group.......................248...........13,525.......1.83%
Consolidated Edison.................242...........13,344.......1.81%
McGraw-Hill.............................819...........12,712.......6.44%
Time Warner Cable(2003-09)..445...........10,558.......4.21%
Avon Products...........................66...........10,150.......0.65%
M&T Bank..................................175............8,962.......1.95%
Forest Labs...............................138.............8,691........1.59%
Cendant(1998-2005). ...............118.............8,110.......1.45%
Moodys(1999-2009).................741............7,821........9.47%
L-3 Communications..................241............7,400.......3.26%
Pepsi Bottling.............................203............7,055.......2.88%
ITT...............................................16............6,779.......0.24%
Estee Lauder..............................128............6,662.......1.92%
Coach........................................393............6,657.......5.90%
Dover...........................................92............6,493.......1.42%
Paychex.....................................178............6,476.......2.75%
Bunge, Ltd(2001-2009).................0............6,252.......0.00%
KeySpan(1998-2006).................246............5,636.......4.36%
XL Capital, Ltd..............................67............5,324.......1.26%
BlackRock(2004-2009)...............183............5,212.......3.51%
North Fork Banc(1998-2005)......122............5,104.......2.39%
Eastman Kodak...........................190............5,074.......3.74%
NY Total for all 45 Corps......42,291......1,583,149......2.67%

Texas
ExxonMobil..............................4,490.........486,408.......0.92%
Conoco Phillips.........................3,062.........163,228.......1.88%
AT&T.........................................4,521.........147,490.......3.07%
Marathon Oil................................858...........44,849.......1.91%
Dell..................................................0...........37,742.......0.00%
Schlumberger...............................231...........31,216.......0.74%
Apache..........................................23...........30,343.......0.08%
Valero Energy..............................359...........29,225.......1.23%
Anadarko Petroleum....................285...........28,132.......1.01%
Kimberly Clark.............................445...........26,029.......1.71%
Texas Instruments........................105...........24,561.......0.43%
Burlington Northern Santa Fe.......527...........24,552.......2.15%
Halliburton...................................168...........17,543.......0.96%
Spectra Energy..............................213...........17,481.......1.22%
Transocean.......................................0...........16,288.......0.00%
Sysco............................................795...........16,088.......4.94%
XTO Energy...................................240...........15,756.......1.52%
Alcon................................................0...........13,978.......0.00%
EOG Resources................................53...........13,721.......0.39%
Baker Hughes.................................129...........12,369.......1.04%
Waste Management........................533...........11,370.......4.69%
Comerica.......................................210...........10,638.......1.97%
Energy Future Holdings.................293...........10,488.......2.79%
Burlington Resources.....................122............9,728.......1.25%
National Oilwell Varco...................147............9,351.......1.57%
JC Penney......................................281............8,619.......3.26%
Electronic Data Systems.................213............8,537.......2.50%
Noble Corp........................................0............8,224.......0.00%
Southwest Airlines.........................126............7,833.......1.61%
SuperMedia...................................358............7,554.......4.74%
Torchmark........................................0............7,553.......0.00%
Clear Channel Communications......175............7,549.......2.32%
Diamond Offshore..............................1............7,519.......0.01%
Kinder Morgan...............................222............6,874.......3.23%
Smith International.........................49............6,554.......0.75%
Weatherford....................................46............6,331.......0.73%
Cooper Industries...........................77............6,224.......1.24%
Noble Energy..................................21............6,193.......0.34%
Ensco International..........................9............6,097.......0.15%
BJ Services......................................61............5,893.......1.04%
CenterPoint Energy.......................124............5,520.......2.25%
Nabors Industries, Ltd.....................54...........5,511.......0.98%
Newfield Exploration.........................8...........5,074.......0.16%
Fluor..............................................109...........5,058.......2.16%
TX Total for all 44 Corps.........19,743......1,377,291.......1.43%

California
Chevron....................................3,057..........211,552.......1.45%
Wells Fargo................................2,461..........108,550......2.27%
Intel.......................................... 1,981..........101,986.......1.94%
Cisco Systems............................2,582...........75,141.......3.44%
Hewlett-Packard...........................642...........66,446.......0.97%
Oracle.......................................2,303...........65,612.......3.51%
Occidental Petroleum...................731...........55,238.......1.32%
Apple........................................1,784...........51,465.......3.47%
Disney.......................................1,864...........47,950.......3.89%
Amgen.........................................728...........40,300.......1.81%
Google.......................................1,685...........27,244.......6.18%
Qualcomm....................................776...........25,105.......3.09%
Countrywide Financial..................515...........18,595.......2.77%
Genentech (1998-2008)................721..........17,372.......4.15% PG&E............................................960..........17,050.......5.63%
GAP..............................................701...........16,945.......4.14%
Safeway........................................676...........16,536.......4.09%
Applied Materials..........................164...........15,532.......1.06%
Franklin Resources.......................390...........14,140.......2.76%
Edison International.....................984...........14,112.......6.97%
Ebay............................................583...........12,760.......4.57%
Charles Schwab.............................719...........12,329.......5.83%
Gilead Sciences............................529...........12,268.......4.31%
Sempra Energy.............................484...........12,209.......3.96%
Golden West Financial..................596...........11,552.......5.16%
Visa.............................................531...........10,120.......5.25%
McKesson......................................83............9,448.......0.88%
SAIC(1998-2008)........................452............8,297.......5.45%
Clorox.........................................297............8,296.......3.58%
Yahoo..........................................554............7,130.......7.77%
Adobe Systems..............................82............6,741.......1.22%
Mattel............................................52............6,529.......0.80%
Unocal(1998-2004).......................46............6,502.......0.71%
Intuit...........................................266............5,996.......4.44%
Seagate Technology(2001-09).........6............5,937........0.10%
Symantec.....................................266............5,642.......4.71%
Linear Technology.......................104............5,562.......1.87%
Maxim Integrated Products..........114............5,442.......2.09%
Computer Sciences (1998-2006)....66............5,423.......1.22%
Allergan.......................................189............5,367.......3.52%
First American.............................237............5,096.......4.65%
CA Total for all 41 Corps.......31,961.......1,175,517......2.72%

New Jersey
JNJ...........................................2,980.......134,152.......2.22%
Merck.......................................2,703.......107,889.......2.51%
AT&T(1998-2004).......................710.........38,045.......1.87%
Wyeth(1998-2008)........................88.........34,285.......0.26%
Tyco International, Ltd................275........27,031.......1.02%
Honeywell....................................406........25,881.......1.57%
Prudential Financial......................351........24,585.......1.43%
Chubb...............................................0........20,513......0.00%
Schering-Plough(1998-2008)........258........19,749.......1.31%
Automatic Data Processing...........527........18,616.......2.83%
Public Service Enterprise Group.1,286........17,591.......7.31%
Campbell Soup.............................232.........12,192.......1.90%
Medco Health Solutions................912........10,815.......8.43%
Becton Dickinson..........................145........10,413.......1.39%
Ingersoll-Rand, plc.......................196.........9,898.......1.98%
Quest Diagnostics.........................531.........7,872.......6.75%
Bed Bath & Beyond.......................330.........7,349.......4.49%
NRG Energy.................................287.........7,201.......3.99%
NJ Total for all 18 Corps........12,217.....534,077.......2.29%

Illinois
Abbott Labs.................................619........52,542.......1.18%
Kraft Foods...............................1,488........47,469.......3.13%
McDonalds................................1,029........44,647.......2.30%
Allstate............................................0........36,823.......0.00%
Exelon.......................................1,454........32,057.......4.54%
Caterpillar....................................315........30,412.......1.04%
Walgreens..................................1,150........27,781.......4.14%
Sears Holdings..............................474........23,910.......1.98%
Illinois Tool Works........................509........21,129.......2.41%
Accenture plc(2000-2009)...........345........20,724.......1.66%
Deere.............................................279........19,540.......1.43%
Baxter............................................161........18,596.......0.87%
Archers Daniel Midland.................309........17,567.......1.76%
Motorola........................................258........13,907.......1.86%
Sara Lee...........................................70........13,083.......0.54%
Northern Trust...............................131........10,176.......1.29%
Aon...............................................275........10,034.......2.74%
Discover Fincl Services(04-09)......305.........9,587.......3.18%
Tribune(1998-2007)......................349.........9,382.......3.72%
Fortune Brands...............................313.........9,097.......3.44%
William Wrigley(1998-2007)............75.........6,302.......1.19%
WW Grainger...................................342.........5,856.......5.84%
CME Group.....................................454.........5,815.......7.81%
RR Donnelley..................................256.........5,246.......4.88%
IL Total for all 24 Corps...........10,960......491,682.......2.23%

North Carolina
Bank of America..........................5,453......178,093.......3.06%
Wachovia....................................1,290........61,531.......2.10%
Lowe's.........................................1,560........33,927.......4.60%
Duke Energy...................................729........30,602.......2.38%
BB&T..............................................334........20,637.......1.62%
Nucor.............................................341........14,537.......2.35%
Reynolds American........................903........13,642.......6.62%
Progress Energy..............................641.........9,005.......7.12%
Lorillard(2004-2009)....................471.........7,870.......5.98%
VF Corp..........................................180.........7,685.......2.34%
Jefferson Pilot(1998-2005).................0.........6,190.......0.00%
Laboratory Corp of America...........358.........6,145........5.83%
Goodrich...........................................95.........5,391.......1.76%
NC Total for all 13 Corps...........12,355.....395,255......3.13%

Connecticut
GE..............................................3,156......235,906.......1.34%
United Technologies.....................487........48,572.......1.00%
Aetna...........................................462.........16,827.......2.75%
Praxair...........................................94.........11,952.......0.79%
Hartford Financial Services..............0.........12,528.......0.00%
Pitney Bowes................................411...........8,793.......4.67%
Xerox...........................................126...........7,590.......1.66%
UST..............................................214...........6,367.......3.36%
Interactive Brokers Group...............8...........5,550.......0.14%
CT Total for all 9 Corps...........4,958......354,085.......1.40%

Washington State
Microsoft.....................................2,094......192,455.......1.09%
Washington Mutual.......................1,531.......39,487.......3.88%
Boeing............................................449........34,831.......1.29%
Costco............................................782........17,413.......4.49%
Paccar............................................185.........12,596.......1.47%
Weyerhaeuser.................................309.........8,025.......3.85%
Starbucks........................................443.........7,197.......6.16%
Nordstrom......................................375.........6,790.......5.52%
Safeco.................................................0..........5,591.......0.00%
WA Total for all 9 Corps.............6,168......324,385.......1.90%

Georgia
Coca-Cola........................................938........77,377.......1.21%
Home Depot..................................3,268........69,621.......4.69%
United Parcel Service....................1,586........50,436.......3.14%
Bell South(1998-2005).....................960........41,341.......2.32%
Southern Company...........................913........24,959.......3.66%
SunTrust Banks.................................245........20,702.......1.18%
AFLAC.................................................0........18,817.......0.00%
Genuine Parts...................................433.........7,883.......5.49%
Coca Cola Enterprises.......................103.........7,057.......1.46%
Newell Rubbermaid............................97.........5,177.......1.87%
GA Total for all 10 Corps..............8,543.....323,370.......2.64%

Ohio
Procter & Gamble.........................1,765......120,702.......1.46%
National City Corp...........................497........24,178.......2.06%
Kroger.............................................641........18,518.......3.46%
Cardinal Health...............................488........17,663.......2.76%
American Electric Power................276........17,237.......1.60%
FirstEnergy..................................1,047........16,613.......6.30%
Fifth Third Bancorp.........................244........16,432.......1.48%
Keycorp.........................................335........12,650.......2.65%
Macy's............................................730........12,318........5.93%
Limited Brands................................564.......12,203.......4.62%
Progressive Corp................................0........11,934.......0.00%
Eaton...............................................82..........8,539.......0.96%
Parker Hannifin...............................161.........8,143........1.98%
Cincinnati Financial............................0.........6,984.......0.00%
Sherwin Williams............................275.........6,837.......4.02%
Duke Energy Ohio/Cinergy..............147.........5,997.......2.45%
Owens Illinois Group.........................69.........5,002.......1.38%
OH Total for all 17 Corps............7,321......321,950......2.27%

Minnesota
US Bancorp.................................2,283........52,473.......4.35%
3M.................................................563........47,265.......1.19%
UnitedHealth...............................1,014........41,242.......2.46%
Target..........................................1,927........36,809.......5.24%
Medtronic......................................409........31,607.......1.29%
Travelers..........................................99........26,156.......0.38%
General Mills..................................456........17,269.......2.64%
Best Buy.........................................659........16,209.......4.07%
Xcel Energy....................................280.........9,801.......2.86%
Mosaic............................................116.........7,408.......1.57%
St Jude Medical...............................134.........6,329.......2.12%
Supervalu.......................................300.........6,143.......4.88%
Ecolab.............................................227.........5,315.......4.27%
Ameriprise Financial.........................88.........5,030.......1.75%
MN Total for all 14 Corps............8,555.....309,056.......2.77%

Pennsylvania
Alcoa..............................................177........24,115.......0.73%
Comcast..........................................956........23,671.......4.04%
PNC Financial Services....................521........23,367.......2.23%
ACE, Ltd.............................................0........16,426.......0.00%
Cigna...............................................229........16,190.......1.41%
HJ Heinz..........................................149........12,707.......1.17%
Mellon Financial Corp......................323........10,810.......2.99%
PPG Industries.................................334........10,675.......3.13%
PPL..................................................222........10,496.......2.12%
Air Products & Chemicals.................129........10,164.......1.27%
Sunoco.............................................452..........8,819.......5.13%
Lincoln National..................................0..........8,742.......0.00%
Hershey............................................249.........7,503.......3.32%
AmerisourceBergen..........................248.........7,148.......3.47%
Tyco Electronics, Ltd..........................13.........6,834.......0.19%
Rohm & Haas.......................................60.........6,392.......0.94%
United States Steel...............................97.........5,497.......1.76%
PA Total for all 17 Corps................4,159.....209,556......1.98%

Arkansas
Walmart.......................................5,013.......179,424.......2.79%
Alltel...............................................619.........13,858.......4.47%
Murphy Oil........................................66.........10,198.......0.65%
Windstream.....................................198..........5,074.......3.90%
AR Total for all 4 Corps...............5,896......208,554.......2.83%

Nebraska
Berkshire Hathaway.........................1,339......111,960.......1.20%
Union Pacific......................................341........21,893.......1.56%
ConAgra Foods...................................286........12,143.......2.36%
TD Ameritrade Holdings.....................243.........6,163........3.94%
NE Total for all 4 Corps..................2,209......152,159.......1.45%

Virginia
Dominion Resources..........................951........24,825.......3.83%
Capital One Financial..........................317........21,532.......1.47%
Gannett..............................................628........17,924.......3.50%
Norfolk Southern................................438........15,116.......2.90%
AES.......................................................11........13,560.......0.08%
SLM....................................................231........12,993.......1.78%
Genworth Financial (2001-09)............(40).......10,220......(0.39)%
Altria Group (2008 and 2009)............462.........9,666.......4.78%
NVR....................................................424.........6,173.......6.87%
VA Total for all 9 Corps..................3,422.....132,009.......2.59%

Michigan
Ford................................................210.......30,242.......0.69%
Dow Chemical..................................422......28,200.......1.50%
Kellogg............................................338.......14,419.......2.34%
Masco..............................................366.......11,125.......3.29%
Stryker............................................265.........9,333.......2.84%
DTE Energy.......................................35.........7,089.......0.49%
Whirlpool........................................116.........6,071.......1.91%
MI Total for all 7 Corps..............1,752......106,479.......1.65%

Missouri
Emerson Electric...............................443.......27,558.......1.61%
Anheuser-Busch.............................1,288.......23,436.......5.50%
Monsanto..........................................142.......12,889.......1.10%
Ameren.............................................349........9,872.......3.54%
H&R Block.........................................406........8,169.......4.97%
May Dept Stores(1998-2004)............375........7,726.......4.85%
Express Scripts..................................133........6,553.......2.03%
DST Systems......................................167........5,225.......3.20%
MO Total for all 8 Corps...............3,303....101,428.......3.26%

Indiana
Eli Lilly.............................................(15)......45,671......(0.03)%
WellPoint.........................................649.......29,665.......2.19%
Zimmer Holdings..............................201........8,084.......2.49%
NiSource...........................................190........5,668.......3.35%
Cummins............................................68........5,566.......1.22%
Guidant(1998-2005).........................187........5,466.......3.42%
IN Total for all 6 Corps.................1,280....100,120.......1.28%

Massachusetts
State Street Corp..............................818.......17,793.......4.60%
EMC.................................................165.......13,575.......1.22%
TJX..................................................684.......13,211.......5.18%
Gillette(1998-2004).........................175.......12,298.......1.42%
Staples.............................................315.......10,643.......2.96%
Covidien, plc(2004-2009)...............228.........9,561.......2.38%
Analog Devices..................................28.........5,910.......0.47%
Boston Scientific..............................225.........5,141........4.38%
Biogen IDEC.....................................138.........5,003.......2.76%
MA Total for all 9 Corps.............2,776........93,135.......2.98%

Florida
Carnival Corporation...........................0.......20,192.......0.00%
FPL Group........................................281.......16,103.......1.75%
Publix Super Markets........................647......14,783.......4.38%
CSX...................................................255.......12,133.......2.10%
Fidelity National Financial................268........7,268.......3.69%
AutoNation.......................................219........5,382.......4.07%
Royal Caribbean Cruises........................0........5,157.......0.00%
FL Total for all 7 Corps.................1,670......81,018.......2.06%

Maryland
Lockheed Martin...........................1,062.......26,615.......3.99%
Constellation Energy........................579.......11,485.......5.04%
Marriott...........................................430........7,187.......5.98%
T Rowe Group...................................296........6,826.......4.34%
Coventry Health Care.......................237........5,175.......4.58%
Black & Decker..................................147........5,086.......2.90%
MD Total for all 6 Corps..............2,751......62,374.......4.41%

Tennessee
FedEx.............................................625.......19,958.......3.13%
HCA................................................857.......19,440.......4.41%
Autozone........................................264.........9,453.......2.79%
International Paper.........................165.........6,602.......2.50%
Unum Group.......................................0.........6,528.......0.00%
TN Total for all 5 Corps................1,911.......61,981.......3.08%

Oklahoma
Devon Energy..................................140.......28,426.......0.49%
Chesapeake Energy...........................69........14,629.......0.47%
Williams Companies.........................102.........8,156.......1.25%
Oneok................................................76.........5,201.......1.46%
OK Total for all 4 Corps..................387.......56,412.......0.69%

Delaware
Dupont............................................93.......33,513.......0.28%
MBNA(1998-2004)........................280.......18,320.......1.53%
DE Total for both Corps.................373.......51,833.......0.72%

Wisconsin
Kohl's..............................................497.......13,133.......3.78%
Johnson Controls............................354.......12,286.......2.88%
Harley-Davidson.............................364.......11,215.......3.25%
Fiserv..............................................311........6,237.......4.99%
Rockwell Automation.......................34.........5,860.......0.58%
WI Total for all 5 Corps..............1,560.......48,731.......3.20%


Arizona
Freeport McMoRan (2007-2009)...93........15,472.......0.60%
Southern Copper.............................13........13,971.......0.09%
Phelps Dodge (1998-2006)............108.........7,900.......1.37%
Apollo Group.................................518.........6,425.......8.06%
AZ Total for all 4 Corps................732.......43,768.......1.67%

Rhode Island
CVS Caremark...............................1,596.......27,592.......5.78%
Textron...........................................239.........8,123.......2.94%
RI Total for both Corps...............1,835.......35,715.......5.14%

Kentucky
Yum Brands...................................167.......11,993.......1.39%
Humana.........................................205........6,099.......3.36%
Brown Forman...............................185........5,741.......3.22%
Ashland...........................................88........5,528.......1.59%
Lexmark..........................................88........5,201.......1.69%
KY Total for all 5 Corps................733......34,562.......2.12%

Oregon
Nike...............................................532.......19,355.......2.75%
Precision Castparts.........................188........7,368.......2.55%
PacifiCorp........................................111........5,059.......2.19%
OR Total for all 3 Corps..................831......31,782.......2.61%

Louisiana
Entergy..........................................306.......16,352.......1.87%
Freeport-McMoran (1998-2006)........0........7,845.......0.00%
CenturyTel.....................................107.........5,945.......1.80%
LA Total for all 3 Corps................413........30,142.......1.37%

Colorado
Newmont Mining................................0........9,795.......0.00%
Western Union................................215........8,334........2.58%
First Data (2001-2008)...................333........6,582.......5.06%
Janus Capital Group.........................181........5,229.......3.46%
CO Total for all 4 Corps................729.......29,940.......2.43%

Alabama
Regions Financial............................194.......10,112.......1.92%
AmSouth Bancorp(1998-2005).........31........6,247.......0.50%
Caremark RX(1998-2006)...............271........5,517.......4.91%
AL Total for all 3 Corps................496.......21,876.......2.27%

Iowa
Principal Financial..........................390........9,622.......4.05%
Rockwell Collins................................48........6,900.......0.70%
IA Total for both Corps.................438.......16,522.......2.65%

Washington DC
Danaher..........................................188.......11,749.......1.60%

Nevada
International Game Technology......173........5,643.......3.07%
MGM Mirage.....................................48.........5,125.......0.94%
NV Total for both Corps................221.......10,768......2.05%

Idaho
Albertsons(1998-2005)...................356........8,457.......4.21%

Kansas
Embarq...........................................352........7,988.......4.41%

Utah
Questar............................................53........5,345.......0.99%

South Carolina
SCANA.............................................73........5,082.......1.44%

=============================================
Four Corps with Total Core Pretax Income > $5 bil for past 12 Years, with State Income Tax Paid, but with insufficient State Income Tax Amounts Disclosed in all 12 Years:

......................................................................Core Pretax Income
Big Corp...................State.............Industry..........Last 12 Years
...........................................................................(mils of dollars)

Northrop Grumman...CA...US Defense Contractor.....18,240
Raytheon...................MA...US Defense Contractor....16,547
General Dynamics......VA...US Defense Contractor.....24,207
Assurant.....................NY...Health Insurance..............5,407

Total.........................................................................64,401

Texas Big Corps Have Paid Modest Amounts of State and Local Corporate Income Taxes

In performing a quick review of SEC filings of large corps with an SEC State Location Code in Texas, I found 43 large Texas Corps with Total Consolidated Pretax Income of more than $5 bil each, for the most recent 12 years.

Included in those 43 Big Texas Corps were a handful of Big Corps, now legally in Switzerland, Ireland, Bermuda, and The Netherlands Antilles, and some previously in The Cayman Islands and Bermuda, all due in large part for income tax avoidance reasons, but with heavy operational control out of Houston.

Below here is the effective state and local corporate income tax rates paid, which are computed by dividing the current state and local income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 43 Big Texas Corps.

These 43 Big Texas Corps below had a weighted average state corporate effective income tax rate paid of only 1.45%. Texas has no state corporate income tax, but does have a gross margin tax.

I present these 43 Big Texas Corps below, sorted by Pretax Income. And then later, I will add some analysis to this post. Everything is Big in Texas. Thus, it is only right that this ends up being a Big Post.

......................................State....................Effective
....................................Income....................State
......................................Tax........Pretax.......Tax
......................................Paid.......Income......Rate
.....................................12 Yrs.....12 Yrs......12 Yrs......Industry
....................................(Millions of Dollars)
.1 ExxonMobil............... 4,490....486,408.....0.92%......Oil&Gas
.2 ConocoPhillips........... 3,062....163,228(4).1.88%......Oil&Gas
.3 AT&T..........................4,521(1).147,490.....3.07%
.4 Marathon Oil.................858.......44,849(5)..1.91%.....Oil&Gas
.5 Dell....................................0(2)..37,742....0.00%
.6 Schlumberger, Ltd..........231......31,216(6)..0.74%.....Oil&Gas
.7 Apache............................23......30,343(7)..0.08%.....Oil&Gas
.8 Valero Energy................359......29,225(8).1.23%.......Oil&Gas
.9 Anadarko Petroleum......285......28,132(9)..1.01%......Oil&Gas
10 Kimberly Clark..............445......26,029......1.71%
11 Texas Instruments........105.......24,561.....0.43%
12 Burlington No Santa Fe..527......24,552.....2.15%
13 Halliburton....................168......17,543.....0.96%.......Oil&Gas
14 Spectra Energy...............213......17,481(10).1.22%.....Oil&Gas
15 Transocean, Ltd.................0......16,288(11).0.00%....Oil&Gas
16 Sysco.............................795(1)..16,088.....4.94%
17 XTO Energy....................240(3).15,756.....1.52%......Oil&Gas
18 EOG Resources.................53......13,721.....0.39%......Oil&Gas
19 Baker Hughes..................129(3).12,369.....1.04%......Oil&Gas
20 Waste Management........533......11,370.....4.69%
21 Comerica........................210......10,638.....1.97%
22 Energy Future Holdings..293......10,488(12).2.79%
23 Burlington Resources(16).122......9,728.....1.25%......Oil&Gas
24 National Oilwell Varco....147.......9,351.....1.57%.......Oil&Gas
25 JC Penney.......................281.......8,619.....3.26%
26 Electronic Data Systs(17).213......8,537.....2.50%
27 Noble Corp.........................0.......8,224.....0.00%......Oil&Gas
28 Southwest Airlines...........126.......7,833.....1.61%
29 SuperMedia.....................358.......7,554.....4.74%
30 Torchmark..........................0.......7,553.....0.00%
31 Clear Channel Comm.........175......7,549(13).2.32%
32 Diamond Offshore.................1.......7,519.....0.01%......Oil&Gas
33 Kinder Morgan..................222......6,874(14).3.23%....Oil&Gas
34 Smith International.............49......6,554.....0.75%......Oil&Gas
35 Weatherford Intl, Ltd...........46(3)..6,331.....0.73%......Oil&Gas
36 Cooper Industries plc..........77......6,224.....1.24%
37 Noble Energy.......................21......6,193.....0.34%......Oil&Gas
38 Ensco International plc..........9.....6,097.....0.15%......Oil&Gas
39 BJ Services..........................61(3)..5,893.....1.04%......Oil&Gas
40 CenterPoint Energy(18).....124......5,520.....2.25%
41 Nabors Industries, Ltd.........54......5,511.....0.98%......Oil&Gas
42 Newfield Exploration.............8....5,074(15).0.16%.....Oil&Gas
43 Fluor.................................109......5,058.....2.16%

Total for all 43 Companies.19,743..1,363,313...1.45%

(1) Also includes Current Foreign Income Tax Paid or Payable. Thus, AT&T and Sysco would have lower State Income Tax Paid, as well as lower effective State Income Tax Rates Paid, than are shown above.
(2) Dell had no disclosure of State Income Taxes, therefore it was assumed that none were paid.
(3) Includes both Current State Income Tax Paid or Payable and Deferred Income Tax Expense. Thus, XTO Energy, Baker Hughes, Weatherford, and BJ Services would all have lower State Income Tax Paid, as well as even lower effective State Income Tax Rates Paid, than are shown above.
(4) Exclusive of Asset Impairment Charges totaling $39.1 bil in 2008 and 2007.
(5) Exclusive of Goodwill Impairment Charge of $1.4 bil in 2008.
(6) Exclusive of Intangible Impairment Charge of $2.8 bil in 2002.
(7) Exclusive of Asset Impairment Charges totaling $8.2 bil in 2009 and 2008.
(8) Exclusive of Goodwill Impairment Charge of $4.0 bil in 2008.
(9) Exclusive of Asset Impairment Charge of $2.5 bil in 2001.
(10)Exclusive of Asset Impairment Charge of $3.5 bil in 2003.
(11)Exclusive of Asset Impairment Charge of $2.9 bil in 2002.
(12)Exclusive of Goodwill Impairment Charge of $8.9 bil in 2008.
(13)Exclusive of Asset Impairment Charges totaling $9.7 bil in 2009 and 2008.
(14)Exclusive of Goodwill Impairment Charge of $4.0 bil in 2008.
(15)Exclusive of Asset Impairment Charges totaling $3.4 bil in 2009, 2008, 2001 and 1998.
(16) Just includes amounts for the eight years 1998 to 2005.
(17) Just includes amounts for the ten years 1998 to 2007.
(18) Just includes amounts for the ten years 2000 to 2009.

Below here isolates the 25 Texas Oil and Gas Big Corps, included in the above 43 Texas Big Corps.

......................................State....................Effective
....................................Income....................State
......................................Tax........Pretax.......Tax.........Texas
......................................Paid.......Income......Rate........Metro
.....................................12 Yrs.....12 Yrs......12 Yrs.......Area
....................................(Millions of Dollars)
.1 ExxonMobil............... 4,490....486,408.....0.92%........Dallas*
.2 ConocoPhillips........... 3,062....163,228.....1.88%......Houston
.3 Marathon Oil..................858......44,849.....1.91%.....Houston
.4 Schlumberger.................231......31,216.....0.74%.....Houston
.5 Apache............................23......30,343.....0.08%......Houston
.6 Valero Energy................359......29,225.....1.23%....San Antonio
.7 Anadarko Petroleum......285......28,132.....1.01%......Houston
.8 Halliburton....................168......17,543.....0.96%......Houston
.9 Spectra Energy...............213......17,481.....1.22%......Houston
10 Transocean.......................0......16,288.....0.00%.....Houston
11 XTO Energy....................240.....15,756.....1.52%.......Dallas
12 EOG Resources.................53.....13,721.....0.39%......Houston
13 Baker Hughes..................129.....12,369.....1.04%......Houston
14 Burlington Resources......122......9,728.....1.25%......Houston
15 National Oilwell Varco....147.......9,351.....1.57%......Houston
16 Noble Corp.........................0.......8,224.....0.00%.....Houston
17 Diamond Offshore...............1.......7,519.....0.01%......Houston
18 Kinder Morgan................222.......6,874.....3.23%......Houston
19 Smith International...........49.......6,554.....0.75%......Houston
20 Weatherford......................46.......6,331.....0.73%......Houston
21 Noble Energy.....................21.......6,193.....0.34%......Houston
22 Ensco International.............9.......6,097.....0.15%.......Dallas
23 BJ Services.........................61.......5,893.....1.04%......Houston
24 Nabors Industries, Ltd.......54........5,511.....0.98%......Houston
25 Newfield Exploration...........8.......5,074.....0.16%......Houston

Total for all 25 Companies.10,851...989,908....1.10%

* However, most ExxonMobil employees are located in Houston.

In the most recent year, these 25 Texas Big Oil and Gas Corps had an incredibly low effective state and local corporate income tax rate paid of 0.29%. It seems to me that this might be a very fertile area for many US States to add to their severely stressed financial coffers.

The above 25 Texas Big Oil and Gas Corps generated Pretax Profits for the most recent 12 years of $989,908,000,000, which represent a massive 73% of all 43 Texas Big Corps profits of $1,363,313,000,000 (yeah, that's more than $1.36 trillion). I have to ask.....so the country gives the Oil Industry all of these very lucrative tax incentives when these Oil and Gas companies make Pretax profits like the above?

And the above 25 Texas Big Oil and Gas Corps doesn't include foreign-owned giant Big Oil Corps BP and Dutch Shell, which have massive operations in Houston.

Let me give below some perspectives on just how outrageous these Texas profits, driven by Texas Big Oil and Gas Corps, are. These numbers are all for the most recent 12 years.

What this detailed information below clearly shows is an incredible swing in profits from US non-Big Oil and Gas Corps all throughout the country to Texas Big Oil and Gas Corps. Later, when I get some time, I'll show the numbers for just the most recent years, which show an even much more dramatic swing in profits from US non-Oil and Gas Corps to Texas Big Oil and Gas Corps.

This unfortunate gigantic swing in profits has just devastated the US economy in the past decade, and was a major cause of the high US unemployment and underemployment rates in the most recent three years. US Non-Oil and Gas Big Corps, and also many smaller businesses, needed to protect their profits by doing something to offset these growing nosebleed energy costs. They elected to drastically cut US employee costs, and also to offshore jobs and to expand operations overseas, in order to pare both employee costs and income taxes.

Here's a preliminary summary of the Big Corps, with Total Pretax Profits of greater than $5 bil each over the past 12 years, headquartered in the 8 large States in America's Midwest. A large portion of these profits are from Manufacturing Corps, which have been severely harmed by the windfall profits of Texas Big Oil and Gas Corps.

........................# of........Pretax
........................Big.........Income
........................Corps.....12 Years
...................................(mils of $s)
Illinois...............20........416,412
Ohio...................15........306,525
Minnesota..........13........299,713
Missouri...............7.........88,287
Michigan..............7.........86,783
Indiana................5..........84,748
Wisconsin............5..........47,514
Iowa....................2..........16,522

Total all 8 States..74....1,346,504

Yeah, Total Texas Big Corp Pretax Profits for the past 12 years of $1,363,313,000,000 exceed those of the Big Corps in these large 8 Midwest US States by $17 bil.

And here's a preliminary summary of the Big Corps, with Total Pretax Profits of greater than $5 bil each over the past 12 years, headquartered in the 17 states in America's vast Southeast and Heartland Areas. A good portion of these profits are from Manufacturing and Retailing Corps, which have both been severely harmed by the windfall profits of Texas Big Oil and Gas Corps.

.............................# of..........Pretax
..............................Big..........Income
.............................Corps.......12 Years
...........................................(mils of $s)
North Carolina.........11.........371,899
Georgia.....................9.........278,431
Arkansas...................3.........203,480
Nebraska...................4.........141,280
Florida......................7...........79,390
Tennessee.................5............61,981
Oklahoma*................4...........52,613
Kentucky...................5...........34,562
Louisiana..................2............22,297
Colorado...................2............16,044
Alabama...................2.............15,629
Kansas......................1..............7,988
South Carolina...........1..............5,082
Mississippi................0.....................0
North Dakota.............0.....................0
South Dakota.............0.....................0
West Virginia............0.....................0

Total all 17 States.....56......1,290,676

* All 4 Oklahoma Big Corps are Oil and Gas companies.

Yeah, Total Texas Big Corp Pretax Profits for the past 12 years of $1,363,313,000,000 exceed those earned by the Big Corps in these 17 Southeast and Heartland Area US States by $73 bil.

And then here's a preliminary summary of the Big Corps, with Total Pretax Profits of greater than $5 bil each over the past 12 years, headquartered in the 12 States in America's Extended Northeast area, excluding the State of New York, but including the DC Area. A huge portion of these profits are from Manufacturing Corps, which have been severely harmed economically by the windfall profits of Texas Big Oil and Gas Corps.

.............................# of..........Pretax
..............................Big..........Income
.............................Corps.......12 Years
...........................................(mils of $s)
New Jersey.............14..........427,371
Connecticut..............8..........333,836
Pennsylvania..........15..........183,826
Virginia...................11..........157,303
Massachusetts..........6............77,679
Maryland.................6.............62,374
Rhode Island............2.............35,715
Delaware..................1.............33,513
Washington DC.........1.............11,749
Maine.......................0.....................0
New Hampshire........0.....................0
Vermont...................0.....................0

Total all 12 States....64.......1,323,366

Yeah, Total Texas Big Corp Pretax Profits for the past 12 years of $1,363,313,000,000 exceed those earned by the Big Corps in these 12 Northeast Area US States by $40 bil.

Lastly, just think about how huge California is. And think of all the stellar huge technology companies there, with Pretax Profits for the past dozen years as follows: Intel $102 bil, Cisco Systems $72 bil, Oracle $66 bil, Hewlett Packard $66 bil,and Apple $51 bil. And then there's Wells Fargo with $109 bil of Pretax Profits, and Disney with $48 bil. And on top of that, there are California's two Big Oil Corps, Chevron, with profits of a massive $212 bil, and Occidental Petroleum with profits of another $55 bil. Yeah, these two California Big Oil Corps comprised a hefty 24% of the Total Profit for California's 36 Big Corps.

Whew, you have to be impressed with the long-term operating performance of all of these California Big Corps.

But guess what? Total Pretax Profits for the past 12 years of California's 36 Big Corps of $1,124,980,000,000 is a gigantic $238 bil short of the total Pretax Profits of Texas' 43 Big Corps.

Now, let's add the rest of the Western States' Big Corps to California's Big Corps. Here's the preliminary related information for all 50 Big Corps, in the 12 Western States, with Pretax Profits above $5 bil each for the past 12 years.

..........................# of.........Pretax
..........................Big..........Income
..........................Corps......12 Years
.......................................(mils of $s)
California.............36.......1,124,980
Washington...........7..........265,203
Arizona.................3............34,771
Oregon..................2............26,723
Nevada..................1..............5,643
Utah......................1..............5,345
Alaska...................0....................0
Hawaii...................0....................0
Idaho....................0....................0
Montana................0....................0
New Mexico...........0....................0
Wyoming...............0....................0

Total all 12 States..50.....1,462,665

Oklahoma has four Big Corps, all Big Oil and Gas Companies, with Pretax Income for the past 12 years in excess of $5 bil each. The Total Pretax Profits of these four Oklahoma Big Oil and Gas Corps totaled $52,613 mil for the past 12 years. When I combine Oklahoma with Texas, I get Total Pretax Income of $1,415,926,000,000 for the Big Corps in these two Big Oil and Gas States. This is just $47 bil short of the above Total Pretax Profit for the past 12 years for the entire vast, very prosperous, leading-edge Western US, 12 States in total.

Let me now focus on the Income Shift among US States in the past decade. Here's some information on the Total Pretax Income of the Big Corps in the country's largest three States, in the country as a whole, and in the US Big Oil and Gas Industry:

..........................................................Two Years...........Percentage
.................................# of...............Pretax Income.........Increase
..............................Big Corps....2008-09.......1998-99...(Decrease)

Texas...........................43........$339.6 bil.......$85.9 bil.....+295%
California*...................36........$293.8 bil.....$102.2 bil......+187%
New York.....................38........$178.6 bil.....$194.5 bil.........(8)%
All US but Big Oil...290....$1,229.8 bil....$808.9 bil......+52%

Texas Oil&Gas.........25......$265.0 bil.......$36.3 bil...+630%
All US Oil&Gas.........35......$373.3 bil.......$44.3 bil...+743%

* Exclusive of Big Oil Corps Chevron and Occidental Petroleum, California's remaining 34 Big Corps Total Pretax Income for 2008 and 2009 drops from $293.8 bil above to $216.2 bil and its decade percentage profit increase drops from 187% above down to 128%.

Yeah, those above numbers are correct.....the increase in profits in the past decade in the entire US Big Oil and Gas Industry of 743% is more than 14 times the increase in profits in the past decade of the rest of the very best US Big Corps of 52%....the only Big Corps included are ones which earned more than $5 bil in the past 12 years. Whoa!....US Big Oil and Gas ruled in the 2000s decade.....and still does.

Well, that US Big Oil 743% monstrous profit increase in the past decade certainly has moderated in 2010? Believe it or not, it hasn't. It's been full speed ahead for US Big Oil profits in 2010. Just check out the following Core Pretax Income increases for the largest of US Big Oil for the nine months ended September 30, 2010.

.......................................Core Pretax Income
..............................Nine Months Ended September 30
..................................2010...........2009....% Increase

ExxonMobil............$37.6 bil.....$24.6 bil........+53%
Chevron..................$23.3 bil.....$12.7 bil........+83%
ConocoPhillips........$15.5 bil.......$6.8 bil.......+126%
Oxy Petroleum..........$5.5 bil.......$3.1 bil........+78%
Apache.....................$3.9 bil.......$2.0 bil.........+95%
Marathon Oil.............$3.9 bil.......$2.5 bil.........+54%
Hess..........................$3.0 bil.......$0.8 bil.......+264%
Devon Energy............$2.9 bil.......$1.0 bil.......+185%

Total of all 8.............$95.6 bil.....$53.6 bil........+78%

I think that US Big Oil and Gas Corp CEOs should spend less time gloating over their very robust P&Ls and more time at their local Food Banks.

It is pretty clear to me that one of the main reasons that the US unemployment and US underemployment rates are so high, and that median wages are so low, is the severe widespread cost pressure placed on other US businesses by US Big Oil and Gas companies. And then the personal financial status, as well as the standard of living, of US citizens have also dramatically deteriorated due to US Big Oil and Gas company unnecessary cost pressure placed on US individuals. Also, Federal, State and Local Governmental entities have all been seriously harmed by the severe inappropriate cost pressure applied by US Big Oil and Gas companies.

What happened in the past 12 years was an unfortunate, massive transfer of wealth from US individuals, from US non-Oil and Gas businesses, and from all US government entities.....federal, state, and local.....to the bottom-line profits of US Big Oil and Gas, mostly headquartered in Texas. The resultant structural problems with the US economy will not be fixed until the out-sized profits of US Big Oil and Gas Corps are properly dealt with in wise, creative ways by the US Government. So far, it has totally failed, and US citizens and all non-Oil and Gas businesses have every right to be very disappointed.

Clearly, for US businesses to be much more competitive, what is needed here is a whole-scale, revolutionary effort to reduce energy costs for all US businesses. To accomplish this, I think there should be incredibly attractive tax incentives for US businesses to do just that. Businesses react to profits. If the US government adopts tax incentives for energy initiatives that will result in higher US business profits, watch how quickly and extensively US businesses will react to them.

There are so many ways to do this. Let me put out for discussion one very simple annual energy tax incentive here. Say a business has total revenues in Year 2 of $110 mil, which is up $10 mil, or 10%, from total revenues in Year 1 of $100 mil. Then say total energy costs, as defined by the US Dept of Energy, in Year 2 are $10.3 mil, which is up $.3 mil, or 3%, from total energy costs in Year 1 of $10 mil. This business would get an Energy Cost Reduction Tax Credit for Year 2 computed something like this:

Year 2 Energy Cost Reduction Tax Credit Computation:

..Revenue Percentage Increase in Year 2............................10.0%
..-Energy Cost Percentage Increase in Year 2........................3.0%
..Excess................................................................................7.0%
..-Minimum Energy Cost Reduction Threshold..Assume it's...5.0%
..= Energy Tax Credit Reduction Percentage in Year 2...........2.0%

..Year 1 Total Energy Costs.....................................$10,000,000
..Assumed Annual Energy Tax Credit Percentage...Say...........30%

..Year 2 Energy Cost Reduction Tax Credit Earned:
.....$10,000,000 X 2.0% X 30% = $60,000

And if you want to make it more of an incentive to reduce energy costs, you can simply increase the 30%, or you can reduce the 5% Threshold, or even do both.

To best tax incentivize businesses to really move the needle toward US energy independence and wise income shifting from Big Oil and Gas Corps to all other US businesses and to US individuals, with the resultant increase in US real GDP growth, lower US unemployment, and lower US underemployment, I would consider the following.....have the Energy Tax Credit Percentage Earned each year move upward as the spread of the Revenue percentage increase over the Energy Cost percentage increase widens, perhaps in a pattern something similar to this.

.......Excess of
..Revenue % Growth..........Resultant
.........Over...................Energy Tax Credit
Energy Cost % Growth.........% Earned

....Less than 1%.......................0%
....1% to 2%...........................10%
....2% to 3%...........................20%
....3% to 4%...........................30%
....4% to 5%...........................40%
....5% to 6%...........................50%
....6% to 7%...........................60%
....7% to 8%...........................70%
....8% to 9%...........................80%
....9% to 10%.........................90%
....More than 10%................100%

Now that's the kind of tax incentive that would make businesses all throughout the country intensely work the critical energy cost issue simultaneously!

In regards to the current Tax Deal debate, granted the very wasteful Corn Ethanol Subsidy has no business being in the new Tax Deal. And neither does the Section 199 Tax Deduction extension for Puerto Rico manufacturing, clearly the result of the all-powerful Big Pharma lobby (yeah, this is a clear federal income tax incentive that Big Pharma gets for shipping its jobs offshore to a tax haven...I'm not kidding...how crazy).

But the Corn Ethanol Subsidy and the Section 199 Big Pharma largesse are both a drop in the bucket as compared with all of the many, very lucrative US Big Oil and Gas Company Tax Subsidies. So US Big Oil and Gas Corps not only get these massive Pretax Profits, which devastate economically all other businesses and individuals, but they also get incredibly high US government tax incentives to do just that. And you want to know why the country has such a low opinion of the US Congress.

Shifting gears to the horrible financial condition so many of the US States are in, now that I have reviewed every US State, let me summarize the weighted average effective State and Local Corporate Income Tax Paid Rates of the 22 US States where its Big Corps, with Pretax Income of more than $5 bil each for the past 12 years, have Total Pretax Income of more than $50 bil each for the past 12 years. The State of Maryland clearly comes out the best, and the State of Indiana wins the Race to the Bottom.....having the lowest weighted average effective State and Local Corporate Income Tax Paid Rate.

For Past 12 Years:
...Big Corps with Pretax Income > $5 bil
...States with Big Corps Generating Total Pretax Income > $50 bil

..................................Effective
...............................State&Local
..................................Income
.................................Tax Rate
....................................Paid

22. Maryland............4.55%
21. Massachusetts........3.29%
20. North Carolina.......3.20%
19. Tennessee...............3.08%
18. Missouri.................3.07%
17. Arkansas................2.80%
16. Georgia..................2.78%
15. Minnesota..............2.75%
14. California...............2.75%
13. New York...............2.60%
12. Virginia..................2.56%
11. Ohio.......................2.32%
10. Illinois...................2.31%
.9. New Jersey.............2.27%
.8. Pennsylvania..........2.26%
.7. Michigan................2.15%
.6. Florida...................2.10%
.5. Washington............2.00%
.4. Connecticut........1.48%
.3. Texas....................1.45%
.2. Nebraska..............1.43%
.1. Indiana.................1.27%

Of the above 22 States, three of them don't have State Corporate Income Taxes: Texas, Washington, and Ohio. For the other 19 States, here is a ranking of the Percentage Discount (State Corporate Income Tax Loophole) each is getting from the State's Statutory Corporate Income Tax Rate. The State of Maryland again comes out best, and the State of Indiana again unveils its hidden Tax Haven Lure to Big Corps, clearly at the expense of both its many financially desperate citizens and its State Educational Institutions.

For Past 12 Years:
...Big Corps with Pretax Income > $5 bil
...States with Big Corps Generating Total Pretax Income > $50 bil

..............................Effective.......State..........State
...........................State&Local..Corporate.......Tax
...............................Income.....Income......Loophole
..............................Tax Rate........Tax........Percentage
................................Paid...........Rate.........Discount

19. Maryland........4.55%........8.25%......44.8%
18. Missouri.............3.07%........6.25%........50.9%
17. Tennessee..........3.08%........6.50%........52.6%
16. North Carolina...3.20%........6.90%........53.6%
15. Georgia..............2.78%........6.00%........53.7%
14. Arkansas............2.80%........6.50%........56.9%
13. Virginia..............2.56%........6.00%........57.3%
12. Florida...............2.10%........5.50%........61.8%
11. Massachusetts....3.29%........8.80%........62.6%
10. New York...........2.60%........7.10%........63.4%
.9. Michigan.............2.15%........6.00%........64.2%
.8. Illinois................2.31%.........7.30%.......68.4%
.7. California............2.75%........8.84%........68.9%
.6. Minnesota...........2.75%........9.80%........71.9%
.5. New Jersey..........2.27%........9.00%.......74.8%
.4. Pennsylvania.......2.26%........9.99%........77.4%
.3. Connecticut.........1.48%........7.50%........80.3%
.2. Nebraska.............1.43%........7.81%.........81.7%
.1. Indiana..............1.27%.......8.50%.......85.1%

Average of All 19......2.56%........7.50%.......65.9%

It should be pointed out that some Cities and Counties, such as New York City, have City and/or County Corporate Income Taxes, which results in their State Corporate Income Tax Loophole Discount Percentages being much higher than those shown above.

The country is finally focusing now on the huge US Federal Income Tax Loopholes that Big Corps have taken advantage of. However, from my extensive research, the State Corporate Income Tax Loophole Percentage Discounts are substantially higher than the US Federal Corporate Income Tax Loophole Percentage Discounts. It shouldn't be too difficult for US State Governments to figure out why that is the case.

To improve their very stressful State financial conditions, as one step, I think it makes sense for all US States to take actions to bring down these huge State Corporate Income Tax Loophole Discount Percentages for Big Corps...66% for these above 19 US States. And I also think many US States should be taking actions to make sure they are picking up their fair share of taxes on Texas Big Oil and Gas Corps massive amount of income.....and also from foreign-owned Big Oil and Gas giants like BP and Dutch Shell.....and frankly, from all foreign-owned Corps, playing particular attention to the way income is allocated.

Alabama Big Corps Have Wide Variance in Amounts of State Corporate Income Tax Rates Paid

In performing a quick review of SEC filings of large corps with an SEC State Location Code in Alabama, I found four large corps with Total Consolidated Pretax Income of more than $4 bil each, for the most recent 12 years.

Below here is the effective state and local corporate income tax rates paid, which are computed by dividing the current state and local income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these four large Alabama Corps. These four large Alabama Corps below had a weighted average state corporate effective income tax rate paid of 2.94%, or a 55% discount to Alabama’s current state corporate income tax rate of 6.50%.

….……………………..................Current………………….....State & Local
….…………………….............State & Local..Consolidated...Effective
….……………………....................Tax………......Pretax………Tax Rate
….……………………....................Paid…….......Income………..Paid
….……………….…......................(Millions of Dollars)

..4. Caremark RX....................271…….........5,517…........4.91%
..3. Vulcan Materials..............183…….........4,255……......4.30%
..2. Regions Financial……….....194…….......10,112*….......1.92%
..1. Compass Bancshares..........60...............4,215……......1.42%

Total of all 4………...................708….........24,099…….....2.94%

* Exclusive of Goodwill Impairment Charge of $6.0 bil

For the most recent year, the effective state and local corporate income tax rates paid by these large Alabama Corps was an even much lower negative 0.89%.

As you can see from the above list , just as is the case consistently throughout the country, financial companies have very low effective state corporate income tax rates paid.

Also from my quick review, it appears that Birmingham life insurance company Protective Life might be the next largest Alabama company. It generated Pretax Income in the past 12 years of $3,503 mil, and paid State Corporate Income Tax of $26 mil, thus a very modest effective state corporate income tax rate of 0.74%, similar to many other life insurance companies all throughout the country.

I think it makes much more sense to balance a State’s severely stressed budget by closing some of the large Corp State Corporate Income Tax Loopholes, rather than by drastically reducing critical state services like education and citizen protection.

Also, I think it makes sense to use some of the funds from the closing of these larger Corp State Income Tax Loopholes to provide some wise, highly stimulative, directly-targeted, job-creating tax incentives to small and medium-sized businesses.

Regarding the present US tax deal negotiations, for maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures, including computer software investments and upgrades, they make.....they could either take 100% first year expensing, or they could instead choose a first-year tax equivalent 35% refundable investment tax credit.

The first-year refundable 35% investment tax credit option is needed because, with the Great Recession, there are so many businesses that now have a US tax loss position, and thus they can’t take advantage of 100% tax expensing. Also, the refundable 35% investment tax option will make it much easier for both smaller and larger, at least somewhat financially troubled businesses to get financing for this equipment purchase. And further, there should be no ten-year CBO-scored cost for this initiative, since when a business elects the 35% investment tax credit option, it will not be allowed any tax depreciation.

Economists have really missed the US economic explosion from this 100% tax expensing of equipment, especially when it is laced with a refundable 35% investment tax credit option.

Both smaller businesses and larger financially troubled businesses will benefit greatly from very large, highly profitable Corps spurred to buy equipment from them, due to the 100% tax expensing option.

But the real US GDP growth jolt comes from the smaller businesses and larger at least somewhat financially troubled businesses taking advantage of the refundable 35% investment tax credit option. These businesses will be able to get financing much easier because 35% of the purchase price of the Equipment is provided on the front end by the US government. And then these businesses are able to buy equipment from other smaller businesses and also from other financially troubled businesses. This whole thing really snowballs….it feeds on itself. Equipment will be flying in 2011 all over the country. Economists can’t seem to grasp this….smart business people do.

Georgia Big Corps Have Wide Variance in Amounts of State Corporate Income Tax Rates Paid

In performing a quick review of SEC filings of large corps with an SEC State Location Code in Georgia, I found 10 large corps with Total Core Consolidated Pretax Income of more than $5 bil each, for the most recent 12 years. My definition of Core Pretax Income excludes large Asset Impairments.

Below here is the effective state and local corporate income tax rates paid, which are computed by dividing the current state and local income tax paid by the consolidated core pretax income, both in total for the past twelve years for each of these 10 Big Georgia Corps. These 10 large Georgia Corps below had a weighted average state and local corporate effective income tax rate paid of 2.64%, or a 56% discount to Georgia’s current state corporate income tax rate of 6.00%.

….……………………..................Current………………….....State & Local
….…………………….............State & Local..Consolidated...Effective
….……………………....................Tax………......Pretax………Tax Rate
….……………………....................Paid…….......Income………..Paid
….……………….…......................(Millions of Dollars)

10. Genuine Parts….................433…..........7,883……......5.49%
..9. Home Depot…………….....3,268……......69,621…….....4.69%
..8. Southern Company...........913……......24,959……......3.66%
..7. United Parcel Service…..1,586….........50,436…........3.14%
..6. Bell South(1998-2005).....960............41,341............2.32%
..5. Newell Rubbermaid............97……........5,177……......1.87%
..4. Coca-Cola Enterprises.......103……........7,057…........1.46%
..3. Coca-Cola..........................938……......77,377……......1.21%
..2. SunTrust Banks………….......245……......20,702………...1.18%
..1. AFLAC...................................0...........18,817……......0.00%

Total all 10………....................8,543…......323,370…….....2.64%

For the most recent year, the effective state and local corporate income tax rates paid by these 10 Big Georgia Corps was an even lower 2.01%.

As you can see from the above list (AFLAC and SunTrust Banks), just as is the case consistently throughout the country, financial companies have very low effective state corporate income tax rates paid.

And then, below here is a summary of what I call a fair measure of the Total State Corporate Income Tax Loopholes Taken by the 9 Big Georgia Corps with total such tax loopholes of at least $200 mil each for the past twelve years. In estimating what I think is a fair measurement of State Corporate Income Tax Loopholes Taken, for ease of computation, I started by multiplying the current Georgia Corporate Income Tax Rate of 6.00% by the total Consolidated Pretax Income of each Big Georgia Corp for the last twelve years. Then, I subtracted the actual total State and Local Income Tax Paid by each of these Corps for the same twelve years.


……………………….........................GA…State & Local...Resultant
………………….........….............Corporate..Effective.......Higher
………………….........………….........Tax……..Tax Rate…...State Tax
………………..........…………...........Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)

1.. Coca-Cola………….................6.00%.......1.21%..........3,705
2.. Bell South...........................6.00%.......2.32%..........1,520
3.. United Parcel Service..........6.00%.......3.14%..........1,440
4.. AFLAC................................6.00%.......0.00%..........1,129
5.. SunTrust Banks...................6.00%........1.18%............997
6.. Home Depot........................6.00%.......4.69%............909
7.. Southern Company.............6.00%........3.66%............585
8.. Coca-Cola Enterprises.........6.00%........1.46%............320
9.. Newell Rubbermaid.............6.00%........1.21%............214

Total of all 9…………………………………………10,819 (yeah, $10.8 bil)

For the most recent six years, the related estimated total State Corporate Income Tax Loopholes Taken, as I have defined them above, by these 9 Big Georgia Corps, was $6.2 bil, as compared to $10.8 bil for the past twelve years.

I think it makes much more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by drastically reducing critical state services like education and citizen protection.

Also, I think it makes sense to use some of the funds from the closing of these larger Corp State Income Tax Loopholes to provide some wise, highly stimulative, directly-targeted, job-creating tax incentives to small and medium-sized businesses.

For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures, including computer software investments, they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit.

There are several reasons the refundable investment tax credit option is a wise one to both be fair to all businesses, and also to best spike up US real GDP growth and job creation. And it should result in very little, and perhaps even no, CBO-scored cost to the US Government over the next ten years.

First, many smaller businesses and most troubled businesses don’t have Cash available to buy this Equipment. And they also usually don’t have either a strong enough balance sheet, or robust enough future cash flow prospects, needed to secure financing on an Equipment purchase. And then in situations where they can get financing, the interest cost they pay will be much higher than what will be paid by a major corporation.

Second, assuming the smaller or troubled business can get financing to buy the Equipment, they won’t get the same economic tax break. Why not? Because from reviewing thousands of financial statements and footnotes in SEC filings of both smaller and troubled companies, there are so many of them that are in a significant tax loss situation, due mainly to the Great Recession. Thus, they will not be able to get the immediate 35% federal income tax benefit from 100% tax expensing of this Equipment investment in the first year, like nearly all very profitable major corporations will be able to do.

Third, many small businesses, that pay federal income taxes, don’t reach the top 35% federal income tax rate. Thus, their ultimate federal income tax benefit will be below this 35% of the Equipment cost.

So how should this clear unfairness to smaller and to troubled businesses be fixed, and at very little or no CBO-scored cost to the US Government over the next ten years?

It’s really simple. Give all smaller and medium-sized businesses the option of getting in the first year an upfront refundable investment tax credit for 35% of the cost of the Equipment. And then the tax basis of this Equipment drops to Zero, and thus no future tax depreciation deduction can be taken on it.

Such an approach directly focuses on improving the poor financial status of many of the smaller businesses and nearly all of the many larger troubled businesses out there. The jolt of job creation so desperately needed doesn’t come mainly from the huge, very profitable major corps getting 100% tax expensing in the first year. It comes from the smaller businesses, which we should be making sure get the same economic benefit from 100% expensing as major corps do. And it also comes from the many at least somewhat troubled companies, like many of the Rust Belt manufacturers in tax loss positions, needing an immediate cash jolt from this 35% investment tax credit to upgrade their equipment infrastructure in order to be more competitive, and thus they will be able to either avoid laying off more employees, or hopefully even adding to their workforces.

This upfront 35% investment tax credit also makes it much easier for smaller and troubled companies to get financing for the Equipment purchase.

And this initiative also maximizes juice to the US economy, so critically needed to create high-quality, private sector jobs. Just watch how equipment and computer software starts moving across the country in 2011. Economists really have missed this one. They are substantially underestimating the economic growth and job creation that will result from this. US real GDP growth will spike up dramatically with this combination of 100% expensing, with the 35% investment tax credit as an option.

I also would add Computer Software to the Equipment items eligible for either the 100% tax expensing or for the 35% refundable investment tax credit option. To maximize US innovation, it is very wise to tax incentivize computer software investments. Computer software is one area where the US continues to clearly excel. Computer Software drives research and technology advances. Computer Software Investents also make US businesses better able to compete globally. And the US should try to get as much of the computer software work of US businesses, now being offshored, to be reshored back to the US. And there should be very little, if any, CBO-scored cost here of adding Computer Software to the tax deal mix.

Also, I think there should be something done that addresses the need for manufacturing building upgrades. And I have a way to do it with very little, and perhaps even no, CBO-scored cost over the next ten years.

Presently, real property tax deprecation is spread over many years, much longer than the ten-year CBO scoring period.

What I would consider doing is to allow businesses that make building improvements, to get first-year tax expensing of the entire first 10 years of tax depreciation allowed presently under the tax rules. Thus, they wouldn't be allowed any tax depreciation deduction on this building improvement in the next 9 years. The tax basis of the property reduces for the first-year tax depreciation taken. And then, all tax depreciation taken after the first 10 years under present tax law, would be dramatically accelerated in some fashion, such as by cutting the remaining tax life in half, and thus doubling the annual tax depreciation starting in Year 11.

This highly incentivized scheme doesn’t change total real property tax depreciation, it just accelerates it dramatically from Years 2 through 10 to Year 1. And it also accelerates it starting in Year 11. Because you are just moving total tax depreciation around among years, there shouldn’t be any long-term CBO scoring cost to the US government for this initiative.

And then to really help the Rust Belt, I would also let them choose a first-year tax equivalent 35% investment tax credit, in lieu of the first-year real property tax depreciation resulting from this initiative. And if a company chooses this 35% investment tax credit option, it would not be allowed any tax depreciation deduction in the first 10 years, and after reducing the tax basis of the real property, it would start tax depreciation in the 11th Year, on a very accelerated basis.

It wouldn’t just be the Rust Belt really helped by this initiative. All businesses throughout the country should be allowed to take advantage of it. Perhaps even businesses in all industries should get this very front-loaded accelerated tax depreciation initiative on building remodelings.

I’d even consider allowing the same real property highly accelerated tax depreciation scheme for all new Manufacturing Buildings and perhaps even all new Buildings in all industries. Again, there shouldn’t be any CBO-scored cost over the 10 year CBO scoring period, because you are just moving tax depreciation deductions around among years, with total tax depreciation not changing.

I can think of no tax incentive that would do a better job of quickly re-energizing the troubled US manufacturing industry than this real property massively accelerated tax depreciation scheme, particularly in combination with President Obama’s wise first-year 100% tax expensing of equipment and computer software initiative, particularly if both the real property and tangible personal property have first-year tax equivalent 35% investment tax credit options to help troubled companies in tax loss positions and also to help many smaller businesses.

Also, the very troubled construction industry will be helped immensely from all of these Manufacturing Building and perhaps even Other Building upgrades, which will occur all throughout the country under this tax initiative. I’d even consider giving some green energy tax credits here for the clearly Green Building improvements, but that would have a CBO scored cost, but it would be worth it to the country, desperately seeking energy independence.

When the Premier of China was recently interviewed, he said that China’s success in recovering so quickly from its recession was due to the country's wise focus on four initiatives in its economic stimulus plan.
…..Infrastructure Investments
…..Upgrading of Plants
…..Innovative Technology
…..Safety Net

The present tax deal struck between the Obama Administration and the US Congress addresses the fourth item…Safety Net, mainly with the 13 month extension of Unemployment Compensation Benefits, although frankly I think we are still way short here....everyone should do what I just recently did.....go to a local Food Bank and observe the incredibly long lines there just to get into the Building.....and I saw a line of 22 Cars extended over two blocks waiting to enter the parking lot of the Food Bank.....there is clearly something grossly wrong here in this country with the whole-scale abandonment of the country's unfortunate people, who are financially desperate to feed their families, through no fault of their own, in these very tough economic times. And the country is focusing all of its time on things like tweaking the Estate Tax. And worse yet, the US Senate is holding the country hostage by demanding that the rich get its tax breaks that it doesn't even need.....all of the US Senate Republicans should get into the real world and go to their local Food Banks.....and all CEOs of US large Corporations should do likewise....it's very eye-opening.

But the other three above successful China initiatives are way too absent from the US tax deal struck.

I think what would make sense in the negotiations now to very quickly seal the deal so that nearly everyone is on board is to change the Estate Tax Rate by a little bit and the Exemption Amount also by a little bit. Also, there should be nothing in the tax deal related to very wasteful Corn Ethanol subsidies. And then in exchange for these two items, and perhaps a few others, I would focus like a laser on the initiatives which maximize US real GDP growth and job creation, and paying close attention to how China did it so successfully.

On Innovative Technology, the US should simply add Computer Software to the 100% expensing mix right now. And then shortly down the road, the business research tax credit should be made permanent, and perhaps even enhanced. Also, the US should allow all foreign graduate students going to US universities to remain in the US after graduation.

On Plant Upgrades, there is clearly a start here with the 100% expensing of equipment in the US tax deal. But I think it can be substantially strengthened by inserting the 35% refundable investment tax credit option. And to strengthen it even further, substantially accelerating real property tax depreciation, as explained earlier, would be very wise.

On Infrastructure, there is not much of it in the US tax deal here. As you are going to see when I present my research study of Texas Big Corps…..we have a major problem here. The Big Oil and Gas Texas Corps have towered over everyone else in the generation of Earnings, particularly in the more recent years, all to the detriment of the rest of US businesses, as well as to the detriment of all US citizens. I think the substantial acceleration of building tax depreciation, both on building remodelings and on new buildings, would add a lot to the necessary US Infrastructure shortfall. And adding in an Energy Tax Credit incentive for wise Energy-Efficient Investments made by all businesses is smart. But clearly much more is needed here in the US Infrastructure Upgrade Arena, particularly so with a clearly Green focus; hopefully this will be done shortly down the road.

When I look at projecting US real GDP growth from this US tax deal, I am convinced that the item in the current US tax deal that will tower over all the others is the 100% Tax Expensing of Equipment. And just by adding the 35% investment tax credit option, to really help both smaller businesses and larger, troubled businesses, will yield an increase in US real GDP growth more than double what it will be, devoid of it. Adding Computer Software to the 100% Tax Expensing mix, with a 35% refundable investment tax credit option, will also add significantly to GDP growth. And lastly, adding the accelerated real property tax depreciation on both building remodelings and new building additions will also substantially bump up GDP growth.

I’ll stick my neck out and project US Real GDP growth percentage increases for 2011 caused by each of these initiatives.

..Due to 100% Expensing of Equipment…………………............+.7%
..Due to Adding Computer Software………………………............+.2%
..Due to Adding the 35% investment tax credit option……....+.8%
..Due to Adding Accelerated Tax Depreciation on Buildings.+.7%
..= Total US Real GDP growth increase in 2011………………...+2.4%

And then more to the point as it relates directly to the many unfortunate people in line at the local Food Bank, the overwhelming majority of the US job creation from the US tax deal will come from the latter two items above, and clearly not from 100% tax expensing of Equipment by very profitable, huge US Corps.