In performing a quick review of SEC filings of large corps with an SEC State Location Code in Maryland, I found six corps with somewhat healthy State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years.
Below here is the effective state corporate income tax rates paid, which 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 of these six larger Maryland Corps. These six larger Maryland Corps below had a weighted average state corporate effective income tax rate paid of a modest 4.44%, or a 46% discount to Maryland’s current state corporate income tax rate of 8.25%.
….……………………...............Current…………………......State
….…………………….................State...Consolidated..Effective
….…………………….................Tax……….Pretax………Tax Rate
….…………………….................Paid……..Income……….Paid
….……………….….................(Millions of Dollars)
..6. Marriott..........................430……...7,187……...5.98%
..5. Constellation Energy.......579........11,485.….....5.04%
..4. Coventry Health Care…...237……....5,175……...4.58%
..3. T Rowe Price Group........296………..6,826……...4.34%
..2. Lockheed Martin*….....1,062……...26,615……...3.99%
..1. McCormick........................71……....3,020……...2.35%
Total all 6………...................2,675…....60,308……...4.44%
* Current and Deferred State Tax Combined
Black & Decker was excluded from the above listing because it did not disclose its state income tax break down in its income tax footnotes.
For the five States I have studied so far, Maryland has by far both the highest effective state corporate income tax rate paid by its largest Corps for the last twelve years, and also by far the lowest discount from the current State Corporate Income Tax Rate. It looks to me like the State of Maryland is clearly outperforming the other States in this key metric, which bears so importantly on the critical fiscal status of each State.
…………………...State Tax Rate……...State
………………………….Paid By……...Corporate
……………………………State………...Income…….Percentage
…………………………Big Corps…....Tax Rate……..Discount
Maryland…………….4.44%.............8.25%...........46%
Massachusetts……..3.16%.............8.80%...........64%
California…………….2.39%..............8.84%...........73%
Illinois………………..1.97%..............7.30%...........73%
Pennsylvania……….2.25%..............9.99%...........77%
And then, below here is a summary of what I call a fair measure of the Total State Corporate Income Tax Loopholes Taken by each of these six larger Maryland Corps 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 Maryland Corporate Income Tax Rate of 8.25% by the total Consolidated Pretax Income of each larger Maryland Corp for the last twelve years. Then, I subtracted the actual total State Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................MD…….....State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. Lockheed Martin………....8.25%.......3.99%...........1,134
2.. Constellation Energy......8.25%.......5.04%.............369
3.. T Rowe Price Group........8.25%.......4.34%.............267
4.. Coventry Health Care…...8.25%.......4.58%.............190
5.. McCormick…...................8.25%.......2.35%.............178
6.. Marriott……………………....8.25%.......5.98%.............163
Total all 6………………………………………….2,300 (yeah, $2.3 bil)
For the most recent twelve years, Maryland headquartered Coventry Health Care has paid substantially higher total corporate state income taxes (a tax rate of 4.58%, only a 44% discount from the Maryland's 8.25% current corporate income tax rate) than three of its huge competitors in the Health Insurance Industry. In comparison, Minnesota-based UnitedHealth Group paid a tax rate of 2.46%, a 75% discount from Minnesota's current tax rate of 9.80%, Indiana-based WellPoint paid a tax rate of 2.21%, a 74% discount from Indiana's current tax rate of 8.50%, and Pennsylvania-based Cigna paid a tax rate of only 1.41%, an 86% discount from Pennsylvania's current tax rate of 9.99%.
It looks like Maryland is also now studying the introduction of combined reporting to close tax loopholes many out-of-state Corps are taking advantage of. This is a very fertile area for tax collections since the actual state effective corporate income tax rates paid by so many Big US Corps are so incredibly low all over the country. It appears that the State of Maryland might be getting a bit of National assistance in this key State Budget helping initiative.
Also, from a fairness standpoint, the above effective Maryland Corporate State Income Tax Rates Paid by these six larger Corps in the past twelve years of 4.44%% is not that far off from the Maryland current state individual income tax rate, which is 4.75% for income of $3,000 up to $150,000, and 5.00% for $150,000 up to $300,000. However, some Maryland counties and the city of Baltimore have additional individual income taxes.
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 they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit.
