In performing a quick review of SEC filings of large corps with an SEC State Location Code in Virginia, I found 11 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 corporate income tax rates paid, which are computed by dividing the current state income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 11 large Virginia Corps. These 11 large Virginia Corps below had a weighted average state corporate effective income tax rate paid of a 2.82%, or a 53% discount to Virginia’s current state corporate income tax rate of 6.00%.
….……………………......................Current…………………........State
….……………………........................State.....Consolidated..Effective
….……………………........................Tax………...Pretax………Tax Rate
….……………………........................Paid……....Income……….Paid
….……………….…..........................(Millions of Dollars)
11. NVR……................................424…........6,173……......6.87%
10. SAIC……………………………......503…….....9,124…….......5.51%
..9. Dominion Resources.............951……...22,078……......4.31%
..8. Gannett……...........................628…......17,924*……....3.50%
..7. Altria Group.......................4,371…….143,203…….....3.05%
..6. Norfolk Southern…................438…......15,116………...2.90%
..5. SLM.......................................231……...12,993……......1.78%
..4. Capital One Financial.............317……...20,721……......1.53%
..3. AES..........................................11……...12,218……......0.09%
..2. Genworth Financial…………….(28)…….....8,399………..(0.33)%
..1. Computer Sciences................(68)**.......8,350…….....(0.81)%
Total all 11……….......................7,778…...276,299…….....2.82%
* Exclusive of Facility Consolidation and Asset Impairment Charges of $8.0 bil
** Includes interest and penalty adjustments from IRS audits
For the most recent year, the effective state corporate income taxes paid by these 11 large Virgina Corps was an even lower 2.16%.
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 nine large Virginia Corps with total such tax loopholes of at least $300 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 Virginia Corporate Income Tax Rate of 6.00% by the total Consolidated Pretax Income of each large Virginia 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.
……………………….........................VA…….....State……..Resultant
………………….........….............Corporate..Effective.......Higher
………………….........………….........Tax……..Tax Rate…...State Tax
………………..........…………...........Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
1.. Altria Group…………............6.00%.......3.05%..........4,221
2.. Capital One Financial..........6.00%.......1.53%.............926
3.. AES……...............................6.00%.......0.09%............722
4.. Computer Sciences.............6.00%......(0.81)%............569
5.. SLM………….........................6.00%.......1.78%.............549
6.. Genworth Financial............6.00%......(0.33)%............532
7.. Norfolk Southern……….......6.00%........2.90%............469
8.. Gannett…………………..........6.00%.........3.50%............447
9.. Dominion Resources……….6.00%.........4.31%.............374
Total all 9…………………………………………8,809 (yeah, $8.8 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 nine large Virginia Corps, was $4.8 bil, as compared to $8.8 bil for the past twelve years.
Excluded from the above lists is McLean, VA based Freddie Mac, even though it generated total pretax profits of $43.8 bil for the nine years from 1998 to 2006. More than offsetting these profits were its huge pretax losses totaling $72.9 bil for the most recent three years from 2007 to 2009.
Once the US Government gets Fannie, Freddie, and the horrible housing crisis back on track, I don’t see why Fannie shouldn’t then start paying income taxes to Washington DC, and why Freddie shouldn’t then start paying more state income taxes. Likewise, I think that Reston, VA based SLM (Sallie Mae), included in the above lists, should be paying much more state corporate income taxes to many US States. All three of these companies are getting the benefit of many city and state services, so why shouldn’t they have to pay for them, like other companies do?
Looking at the first above list, you’ll find NVR, a Reston, VA based home builder. I think it is really telling that this is the only home builder in the country I have seen so far which made over $5 bil in Total Pretax Income for the most recent twelve years. Also, unlike the other home builders, NVR has made a profit in each of the most recent twelve years.
I think the above NVR consistent success story is a salient insight into why the US government just hasn’t executed in helping its desperate US citizens, who live outside the Beltway Bubble. Things just aren’t that bad economically in the greater DC area, and the US government employees, including the US Congress and key Administrative personnel, just haven’t felt the economic pain that the rest of the US citizenry has experienced. This is a main reason why there is such rage in the country.
Let me add to this thought. Falls Church, VA based US government contractor General Dynamics was also excluded from the above list, even though it generated Total Pretax Income of $24.2 bil in the past twelve years. It didn't disclose all of its Current State Corporate Income Tax amounts. It is able to pass on its state corporate income tax costs to the US government in its US government contracts.
General Dynamics has rocked in the Great Recession, with Pretax Profits of $7,117 mil for the most recent two years of 2008 and 2009. In comparison, in the decade earlier two years (1998 and 1999), its Pretax Profits were only $2,030 mil. That’s a 251% profit increase in the very troubled past decade.
But it’s not just General Dynamics that has flourished during this Great Recession, but also the other huge US government contractors. The other three huge US government contractors with a substantial portion of their sales to the US government are Lockheed Martin, Northrop Grumman and Raytheon.
These four US government contractors generated Net Sales in just 2009 of $128.7 bil, an increase of 91% over a decade ago in 1999 of $67.5 bil. That’s bad enough, but much worse is that the Total Pretax Income of these four US government contractors totaled $13.0 bil in 2009, up a much more substantial 227% over the $4.0 bil earned a decade earlier in 1999. Given how horrible the US economy is, there is no way that the US government should be permitting its huge US government contractors to be generating obscene profits like this, on the backs of US citizens, and also on the back of the US Deficit. The only industry I have seen that has topped the huge US defense contractors in obscene profit growth of the past decade is Big Oil.
US government employees need a wake-up call. It is only fair that the horrible economic recession and jobless recovery be shared by them, as well as by the many US government contractors…..and it’s not happening. Private sector employees, as well as the unemployed, are enraged over how US government employees have been protected, and even rewarded, during this horrible recession and jobless recovery.
And US government employees have done so little to help the US get out of its deep recession and jobless recovery. A clear illustration of this is how the GSA executed during the Economic Stimulus…..and also, from first-hand experience, how the IRS continues to function….it needs a complete overhaul. The IRS acts as a clear impediment to US economic growth and to job creation.
Anyway, 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.
