In performing a quick review of SEC filings of large corps with an SEC State Location Code in North Carolina, I found 14 large corps with Total Consolidated Core Pretax Income of more than $4 bil each, for the most recent 12 years. My definition of Core Pretax Income excludes large Asset Impairments.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state and local corporate income tax paid by the consolidated core pretax income, both in total for the past twelve years for each of these 14 large North Carolina Corps. These 14 large North Carolina Corps below had a weighted average state corporate effective income tax rate paid of a 3.13%, or a 55% discount to North arolina’s current state corporate income tax rate of 6.90%.
….……………………......................Current………………Core......State
….……………………........................State.....Consolidated..Effective
….……………………........................Tax………...Pretax………Tax Rate
….……………………........................Paid……....Income……….Paid
….……………….…..........................(Millions of Dollars)
14. Progress Energy……................641….......9,005……......7.12%
13. Reynolds American….............903…......13,642…….....6.62%
12. Lorillard(2004-2009)............471..........7,870...........5.98%
11. Laboratory Corp of America…358……....6,145…….......5.83%
10. Lowe’s…...............................1,560……..33,927……......4.60%
..9. Family Dollar Stores…….........163…........4,376……......3.72%
..8. Bank of America..................5,453…….178,093…….....3.06%
..7. Duke Energy………..................729……...30,602………...2.38%
..6. Nucor......................................341……..14,537……......2.35%
..5. VF Corp...................................180……….7,685……......2.34%
..4. Wachovia..............................1,290……..61,531……......2.10%
..3. Goodrich…................................95………..5,391……......1.76%
..1. BB&T.......................................334…......20,637…….....1.62%
..1. Jefferson Pilot(1998-2005).........0..........6,190...........0.00%
Total all 14………......................12,518…....399,631…….....3.13%
As you can see from the above list, as with many other states, the state corporate income tax rates paid by North Carolina’s financial companies is much lower than it is for companies in other industries.
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 large North Carolina Corps with total such tax loopholes of at least $250 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 North Carolina Corporate Income Tax Rate of 6.90% by the total Consolidated Pretax Income of each large North Carolina Corp for the last twelve years. Then, I subtracted the actual total State Income Tax Paid by each of these Corps for the same twelve years.
……………………….........................NC……......State……..Resultant
………………….........….............Corporate..Effective.......Higher
………………….........………….........Tax……..Tax Rate…...State Tax
………………..........…………...........Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
1.. Bank of America…………........6.90%......3.06%...........6,835
2.. Wachovia.............................6.90%......2.10%...........2,956
3.. Duke Energy………................6.90%.......2.38%..........1,383
4.. BB&T………...........................6.90%.......1.62%..........1,090
5.. Lowe’s…………......................6.90%.......4.60%.............781
6.. Nucor………..........................6.90%.......2.35%.............662
7.. Jefferson Pilot....................6.90%.......0.00%.............427
8.. VF Corp......………………….....6.90%.......2.34%.............350
9.. Goodrich……………………......6.90%........1.76%.............277
Total all 9…………………………………………14,761 (yeah, $14.8 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 large North Carolina Corps, was $8.3 bil, as compared to $14.8 bil for the past twelve years.
It’s pretty clear from the above list, that if a State wants to collect more state income tax money from North Carolina Big companies, then it would be wise to focus on North Carolina’s Big banks.
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 either drastically reducing critical state services like education and citizen protection, or by significantly increasing state university tuition.
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.
When you think about it, the North Carolina Research Triangle area has historically been a hotbed for incredible innovative expertise, which is presently somewhat dormant. It needs to be unleashed in order to make the US more competitive on the world scene. And it also needs to be unleashed to bring the country out of its horrible jobless recovery. Principally the US government, but also the State Government, need to create the strong stimulative environment to permit the key Research Triangle area to thrive economically. Clearly, smart research tax credits and investment tax credit incentives are needed here, primarily targeted at research and technology, and particularly at computer software, computer infrastructure, green energy, and medical science.
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.
