My earlier post summarized effective State and Local Corporate Income Tax Rates Paid by the 370 Most Profitable US Big Corps, which generated Core Pretax Income in excess of $5 bil for the most recent 12 years. My definition of Core Pretax Income excludes large Asset Impairment Charges, like ones resulting from the Ceiling Test for Oil and Gas companies, and from Goodwill Impairment for companies in all industries. It also excludes Acquired In Process R&D Charges.
When I stratify this research, it is pretty clear that the largest, most profitable Corps have the lowest effective Corporate State Income Tax Rates Paid.
The top 20%, or the top 74 Big Corps with the highest Pretax Income, represented a much more substantial 63% of the Total Core Pretax Income for all 370 Big Corps.
In the past decade, the very Big US Corps have gotten so much bigger, relative to the rest of the Big Corps. This trend is especially prevalent in the Big Oil sector, but it is also the case, to a somewhat lesser degree, with the very Big Corps in many other sectors.
Here’s a stratification of the weighted average effective Corporate State and Local Income Tax Rate Paid by these 370 very profitable Big Corps:
.....Top 20% of Big Corps………....2.11%
.....Second 20% of Big Corps…….2.50%
.....Middle 20% of Big Corps……..2.94%
.....Fourth 20% of Big Corps……..2.95%
.....Bottom 20% of Big Corps…….2.62%
The above trend makes sense to me, except for the Bottom 20% effective tax rate dropping by a bit. The very Big Corps have a very extensive list of exceptionally qualified, creative state tax strategists, both inside and outside their firms. Also, the very Big Corps have a higher portion of their earnings generated overseas.
I am interested to see what happens with the effective tax rates for the Medium-sized Corps, which earn just below that of the top most profitable 370 firms above. Thus, I will now be researching here Medium-sized Corps, which I am defining as publicly-held US Corps which generated at least $2 bil in Total Core Pretax Income in the most recent 6 years, and which are not already included in the top 370 most profitable very Big Corps.
I will start this new research by focusing on the Big Three US States…..New York, Texas, and California. Here’s a brief summary of my earlier research results for the very Big Corps in these three states, and for all US States.
......................................Most Recent Twelve Years
..............................#....State&Local.......................Effective
.............................of......Corporate........Core......State&Local
.............................Big.......Income.........Pretax......Tax Rate
.......State.............Corps....Tax Paid.......Income........Paid
...........................................(Millions of Dollars)
New York...............45.......42,291......1,583,149......2.67%
Texas.....................44........19,743.....1,377,291......1.43%
California...............41........31,961.....1,175,517......2.72%
Total of Big Three..130…….93,995……4,135,957……2.27%
Remainder of US...242……111,976……4,813,345……2.33%
All of US……….......370……205,971…..8,949,302…..2.30%
In comparison to the above effective tax rates paid, the current statutory Corporate State Income Tax Rates for NY is 7.10%, for California is 8.84%, and for the entire US is an average 7.39%. Texas does not have a state corporate income tax, although it does have a Gross Margins tax.
Now, here is a State Summary of my new research for Medium-sized Corps, with Core Pretax Income (PTI) above $2 bil for the most recent 6 years in these three Big US States. Since in my research, I found many Texas Mid-sized Corps with Core Pretax Income just under $2 bil, I also added them here.
.........................................Most Recent Six Years
..............................# of......State&Local......(PTI).........Effective
............................Medium...Corporate........Core......State&Local
...............................Size.......Income.........Pretax.......Tax Rate
.......State................Corps.....Tax Paid.......Income.........Paid
..............................................(Millions of Dollars)
..California.................15........1,217............45,285.........2.69%
..New York.................15........1,272...........48,637.........2.62%
..Texas
......PTI > $2 Bil..........19...........912............52,461.........1.74%
......PTI $1.5-$2 Bil.....17..........589............30,254.........1.95%
Total Big Three States..66…….3,990……....176,637……...2.26%
And below here are the individual 66 Medium-sized Corps in each of these three Big US States:
..........................................Most Recent Six Years
.........................................State&Local....(PTI).........Effective
.........................................Corporate........Core......State&Local
.......State............................Income.........Pretax......Tax Rate
....Corporations..................Tax Paid.......Income........Paid
.............................................(Millions of Dollars)
California with PTI > $2 bil for past 6 Years
DIRECTV................................200...........7,662.........2.61%
Western Digital...........................4...........4,027.........0.10%
DaVita.....................................161...........3,307.........4.87%
Agilent Technologies................83...........3,102.........2.68%
Reliance Steel & Aluminum.....122...........2,808.........4.34%
Ross Stores...............................92...........2,644.........3.48%
Juniper Networks.....................90...........2,644.........3.40%
Xilinx........................................24...........2,638.........0.91%
Jacobs Engineering.................109...........2,637.........4.13%
National Semiconductor...........43(1).......2,470.........1.74%
Lam Research...........................12...........2,428.........0.49%
Varian Medical Systems............72..........2,404.........3.00%
KLA Tencor..............................37...........2,333.........1.59%
Altera.......................................27...........2,112.........1.28%
Robert Half Intl.......................141...........2,069.........6.81%
CA Total for all 15 Corps.....1,217.........45,285.........2.69%
New York with PTI > $2 bil for past 6 Years
Corning...................................(13)..........8,423.........(0.15)%
AOL Inc(2006-2009)..............273..........4,542.........6.01%
Mastercard...............................93...........4,531.........2.05%
Arch Capital Group, Ltd(4).........5............3,445.........0.15%
Polo Ralph Lauren..................138...........3,365.........4.10%
CA............................................62...........3,324.........1.87%
Tiffany....................................130...........2,579.........5.04%
NYSE Euronext........................52...........2,504.........2.08%
Starwood Hotels & Resorts.....102...........2,477.........4.12%
Arrow Electronics....................49...........2,412.........2.03%
New York Community Bancorp.39..........2,375.........1.64%
Assurant(2004-2006)...............0(2).......2,288.........0.00%
Constellation Brands...............131...........2,267.........5.78%
National Fuel Gas.....................85...........2,085.........4.08%
NASDAQ OMX Group..............126...........2,020.........6.24%
NY Total for all 15 Corps....1,272........48,637.........2.62%
Texas with PTI > $2 bil for past 6 Years
Tesoro....................................203...........3,810.........5.33%
Plains Exploration&Production.65...........3,603.........1.80%
Temple Inland...........................60(3).......3,449.........1.74%
Affiliated Computer Services.....89...........3,442.........2.59%
El Paso........................................0...........3,197.........0.00%
Dr. Pepper Snapple Group........138...........3,154.........4.38%
Cameron International..............17...........3,067.........0.55%
Patterson UTI Energy................56...........2,937.........1.91%
Southwestern Energy..................0...........2,901.........0.00%
Rowan Companies.......................4...........2,777.........0.14%
HCC Insurance Holdings............24...........2,555.........0.94%
McDermott................................61...........2,517.........2.42%
Lyondell Chemical.....................13...........2,258.........0.58%
Pride International.....................0(2).......2,240.........0.00%
GameStop.................................52...........2,177..........2.39%
Ultra Petroleum..........................1...........2,172..........0.05%
Dean Foods...............................61...........2,116..........2.88%
Celanese...................................56(1).......2,046..........2.74%
FMC Technologies.....................12...........2,043..........0.59%
TX Total for all 19 Corps........912.........52,461..........1.74%
Texas with PTI from $1.5-$2.0 bil for past 6 Years
RadioShack...............................85...........1,971.........4.31%
Frontier Oil...............................77...........1,962.........3.92%
Helix Energy Solutions Group.....0(2).......1,948.........0.00%
Americredit..............................48(1).......1,921.........2.50%
BMC Software............................28...........1,905.........1.47%
Flowserve.................................14...........1,890.........0.74%
Denbury Resources...................20...........1,821.........1.10%
Cabot Oil&Gas...........................18...........1,765.........1.02%
EXCO Resources........................(1)..........1,761........(0.06)%
Whole Foods Market................176..........1,752.........10.05%
KBR.........................................(16)..........1,710........(0.94)%
Global SantaFe(2004-06)(5).......2...........1,702.........0.12%
Commercial Metals...................61...........1,701.........3.59%
Alliance Data Systems...............36...........1,687.........2.13%
Atmos Energy...........................44...........1,637.........2.69%
Grant Prideco.............................7(1).......1,583.........0.44%
Pioneer Natural Resources......(10)..........1,538.......(0.65)%
TX Total for 17 Corps...........589.........30,254.........1.95%
(1) Includes both Current State Income Tax Expense and Deferred State Income Tax Expense.
(2) No mention of any State Income Taxes, therefore I assumed none were paid.
(3) Also includes Foreign Income Tax Paid.
(4) Bermuda Corp, but with New York City CPA firm
(5) Was a Cayman Islands Corp, but with Houston SEC Business and Mailing Addresses. It had a Houston CPA firm. It was acquired by Transocean, Ltd.
The above list of 36 Texas Medium-sized Corps include 22 in the Oil and Gas Related Industries. The Houston metro area is home to 16 of these 22 companies. Clearly, Texas has prospered from the Big Oil industry, while the rest of the country has suffered in the 2000s Lost Decade.
It is pretty clear to me that Big Oil has just devastated the US economy in the past decade. While Big Oil earnings continued to go to the moon, and still do, other US businesses and all US individuals have been severely damaged economically by unnecessary sky-high energy costs.
To be fair, this all started when the Clinton Administration allowed Big Oil to merge. Big Oil continued to pick up steam during the years of the very friendly to Big Oil Bush/Cheney Presidency. When ExxonMobil, Chevron, and ConocoPhillips are this huge, they dominate and control much of US society, including the US government.
I think that unless the US Government effectively deals with the out-sized profits of Big Oil, there is going to be an unprecedented backlash from both financially desperate US citizens and US businesses. This isn't the way it should be....where Houston rocks while the rest of the country gets rolled!
