In performing a quick review of SEC filings of large corps with an SEC State Location Code in Rhode Island, I found three corps with healthy State Corporate Income Tax Loopholes Taken of at least $250 mil each, at least the way I measure them, in the most recent dozen years. Rhode Island has one giant corporation…CVS Caremark.
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 three larger Rhode Island Corps. These three larger Rhode Island Corps below had a weighted average state corporate effective income tax rate paid of 4.81%, or a 47% discount to Rhode Island’s current state corporate income tax rate of 9.00%.
….……………………...............Current…………………......State
….…………………….................State...Consolidated..Effective
….…………………….................Tax……….Pretax………Tax Rate
….…………………….................Paid……..Income……….Paid
….……………….….................(Millions of Dollars)
..3. CVS Caremark..............1,596……..27,592……...5.78%
..2. Textron…………...............239……....8,123……...2.94%
..1. Hasbro..............................32……....3,140……...1.02%
Total all 3………..................1,867…....38,855……...4.81%
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 three larger Rhode Island 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 Rhode Island Corporate Income Tax Rate of 9.00% by the total Consolidated Pretax Income of each larger Rhode Island 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.
……………………….....................RI…….....State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. CVS Caremark...…………...9.00%.......5.78%.............887
2.. Textron...........................9.00%.......2.94%............492
3.. Hasbro……………..............9.00%.......1.02%.............251
Total all 3………………………………………….1,630 (yeah, $1.6 bil)
For the past six years, the estimated total State Corporate Income Tax Loopholes Taken was $1.2 bil, as compared to $1.6 bil for the past twelve years.
I think it makes much more sense to balance a State’s budget by closing some of the larger Corp State Corporate Income Tax Loopholes, rather than by significantly 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 they make.....they could either take 100% first year expensing, or they could instead choose a refunable investment tax credit.
