In reviewing the SEC filings of large corps headquartered in California, it took me quite awhile before I finally found a gem….one that is actually paying a reasonably fair amount of Total State Corporate Income Tax.
Since going public, Google has paid a state corporate effective income tax rate of 6.18%, as compared to the current California State Corporate Income Tax Rate of 8.84%.
How about all the other really large California Corps?....Well, they really haven’t done too much to help the State of California get out of its horrible fiscal crisis.
Anyway, below here is the effective state corporate income tax paid rates for the last twelve years in total for the largest California Corps, which have taken advantage of what I call a fair way of measuring State Corporate Income Tax Loopholes of at least $500 mil each. In estimating this fair measurement of State Corporate Income Tax Loopholes, for ease of computation, I started by multiplying the current California Corporate Income Tax Rate of 8.84% by the total Consolidated Pretax Income of each large California headquartered Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
The below effective state corporate income tax rates paid are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each company. Some pundits might call this a Race to the Bottom, or which large California Corp can pay the least state corporate income taxes. Well, it looks like it was a blanket finish, with Mattel just nosing out McKesson and Hewlett-Packard. These 20 large California Corps below had a weighted average state effective tax rate paid of a very modest 2.39%, or a 73% discount to California’s current state corporate income tax rate of 8.84%.
….…………………….....Current…………………......State
….…………………….......State...Consolidated..Effective
….…………………….......Tax……….Pretax………...Tax
….…………………….......Paid……..Income……….Rate
….……………….….......(Millions of Dollars)
20. Google…………....1,685…….27,244……..6.18%
19. GAP………………......701…….16,945……..4.14%
18. Sempra Energy…...484…….12,209……..3.96%
17. Disney………….....1,864…….47,950……..3.89%
16. Cisco Systems…..2,582…....72,442……..3.56%
15. Oracle………........2,303…....65,612……..3.51%
14. Apple……….........1,784…….51,465……..3.47%
13. Qualcomm…….......776…....25,105……..3.09%
12. Countrywide Fincl..515…....18,595....….2.77%
11. Franklin Resources.390…....14,140……..2.76%
10. Wells Fargo……....2,461…..108,550……...2.27%
..9. Amgen………...........728…….34,933……...2.08%
..8. Intel…………….......1,981…..101,986……...1.94%
..7. Chevron…………...3,057…..211,552……...1.45%
..6. Oxy Petroleum….....731…….55,238……...1.32%
..5. Adobe Systems.........82……...6,741……...1.22%
..4. Applied Materials....151…….14,654……...1.03%
..3. Hewlett-Packard......525…….59,166……...0.89%
..2. McKesson………….......83………9,448……...0.88%
..1. Mattel……...................52………6,529……...0.80%
Total all 20……….......22,935….960,504……..2.39%
And then, below here is a summary of what I call a fair measure of the Total State Corporate Income Tax Loophole, computed as explained earlier above, for each of these twenty large California Corps for the past twelve years::
……………………….....................CA……......State…….Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
Chevron………….......…………...8.84%.......1.45%........15,644
Wells Fargo………….........……..8.84%.......2.27%.........7,135
Intel……………...........……........8.84%.......1.94%.........7,035
Hewlett-Packard......……………8.84%.......0.89%.........4,705
Oxy Petroleum……………........8.84%.......1.32%..........4,152
Cisco Systems………..……….....8.84%.......3.56%..........3,822
Oracle……………….......……......8.84%.......3.51%..........3,497
Apple………………......……….....8.84%.......3.47%..........2,766
Disney………………………….......8.84%.......3.89%..........2,375
Amgen…........…………………....8.84%.......2.08%..........2,360
Qualcomm…………........………..8.84%......3.09%..........1,443
Applied Materials…....………….8.84%.......1.03%.........1,144
Countryside Financial…………..8.84%......2.77%.........1,129
Franklin Resources……………...8.84%......2.76%............860
GAP………….......……………........8.84%......4.14%.............797
McKesson…………….......…….....8.84%......0.88%............752
Google………………......……….....8.84%.......6.18%............723
Sempra Energy……………..........8.84%......3.96%............595
Mattel…………......……………......8.84%......0.80%............525
Adobe Systems………….....……..8.84%......1.22%............514
Total all 20…………………………………………61,974 (yeah, $62 bil)
For the most recent five years, the weighted state corporate effective income tax rate paid by these twenty corps was 2.11%, and the related estimated total State Corporate Income Tax Loophole Taken was $40.7 bil, as compared to $62.0 bil for the past twelve years.
I think it makes 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 either drastically reducing critical state services like education and citizen protection, or by drastically increasing state university tuition.
Also, from a fairness standpoint, the above effective California Corporate State Effective Income Tax Rates Paid by these twenty Big Corps are so incredibly low in comparison with California’s current individual income tax rates, which for income amounts above $47,055 and up to $1 million, is a substantially higher 9.55%. Granted the stated California Corporate State Income Tax Rate is a much closer 8.84%, but the state corporate income tax rate actually paid by these twenty large California Corps averaged only 2.39%. That massive tax rate variance just doesn’t make any sense to me.
