In performing a quick review of SEC filings of large corps with an SEC State Location Code in Wisconsin, I found six corps with healthy State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years. Marshall & Ilsley was excluded because it experienced huge losses in the most recent two years. In like manner, MGIC Investment Corp was excluded since it had large losses in each of the past three years. Fiserv generated Total Pretax Income of $6,237 mil for the past 12 years, but wasn't included in the below list of Wisconsin Big Corps, since its estimated State Corporate Income Tax Loopholes Taken were below $200 mil.
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 Wisconsin Corps. These six larger Wisconsin Corps below had a weighted average state corporate effective income tax rate paid of a modest 2.79%, or a 65% discount to Wisconsin’s current state corporate income tax rate of 7.90%.
….……………………...............Current…………………..........State
….…………………….................State.....Consolidated....Effective
….…………………….................Tax………...Pretax………..Tax Rate
….…………………….................Paid……....Income………...Paid
….……………….…...................(Millions of Dollars)
..6. Kohl’s............................497…….....13,133…….....3.78%
..5. Harley Davidson….........364...........11,215.….......3.25%
..4. Johnson Controls………..350…….....11,069…….....3.16%
..3. Associated Banc………......52............3,215….........1.62%
..2. Manpower…....................47…….......3,631…........1.29%
..1. Rockwell Automation......34…….......5,860…….....0.58%
Total all 6……….................1,344…........48,123…….....2.79%
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.
After reviewing the SEC filings of Wisconsin manufacturing company after manufacturing company, it is pretty clear to me why there was such widespread dissatisfaction with both the Federal and State Government, as shown in the recent November 2010 election. Either nobody in government is listening to these many manufacturing people in the State of Wisconsin, or even worse, they are listening but the Government just isn't able to execute. Wisconsin has all of this incredible manufacturing innovative expertise that is presently dormant, for the most part. It needs to be unleashed in order to make the US more competitive on the world scene. And more importantly, 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 these many Wisconsin manufacturing companies to thrive. Clearly, smart business tax incentives are needed here, like investment tax credits, research tax credits, and jobs tax credits.
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, with a bonus percentage for capital expenditures made by the very troubled Rust Belt manufacturers, like those in Wisconsin. I wouldn't give the bonus investment tax credit percentage to huge companies.
And then lastly, from a fairness standpoint, the above weighted average effective Wisconsin Corporate State Income Tax Rates Paid by these six larger Corps in the past twelve years of 2.79% is very low in comparison with Wisconsin’s current individual income tax rate of 6.5% on income above $20,500 and up to $153,280.
