In performing a quick review of SEC filings of large corps with an SEC State Location Code in Nebraska, I found 4 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 4 large Nebraska Corps. These 4 large Nebraska Corps below had a weighted average state corporate effective income tax rate paid of a very modest 1.43%, or a huge 82% discount to Nebraska’s current state corporate income tax rate of 7.81%.
….……………………...............Current………………................State
….…………………….................State………Consolidated…..Effective
….…………………….................Tax………........Pretax………Tax Rate
….…………………….................Paid…….........Income………..Paid
….……………….…...................(Millions of Dollars)
..4. TD Ameritrade................243……........6,163……......3.94%
..3. ConAgra Foods................311….........11,463……......2.71%
..2. Berkshire Hathaway……1,339*……...111,960……......1.20%*
..1. Union Pacific**...............128.............11,694……......1.09%
Total all 4………..................2,021…........141,280……......1.43%
* Includes both Current State Income Tax Paid or Payable and Deferred State Income Taxes. Thus, Berkshire Hathaway’s Current State Income Tax Paid or Payable should be less than the above $1,339 mil, and its effective state corporate income tax rate paid should be lower than the above 1.20%.
** Union Pacific just disclosed its Current State Income Tax Paid or Payable from 1998 to 2006, and thus the above numbers are just for those 9 years.
For the most recent year, the effective state corporate income taxes paid rate by these 4 large Nebraska Corps was an even lower 1.09%.
And then, below here is a summary of what I call one reasonably fair way to measure the Total State Corporate Income Tax Loopholes Taken by the 4 large Nebraska Corps. 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 Nebraska Corporate State Income Tax Rate of 7.81% by the total Consolidated Pretax Income of each large Nebraska Corps 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.
……………………….........................NE………..State……......Resultant
………………….........….............Corporate..Effective..........Higher
………………….........………….........Tax……..Tax Rate…......State Tax
………………..........…………...........Rate……....Paid….....Last 12 Years
………………………………………………….......................(Mils of dollars)
1.. Berkshire Hathaway………....7.81%......1.20%*.........7,405*
2.. Union Pacific......................7.81%.......1.09%..............785**
3.. ConAgra Foods…................7.81%.......2.71%..............584
4.. TD Ameritrade…………………7.81%.......3.94%..............238
Total all 4………………………………………9,013 (yeah, $9.0 bil)
* Includes both Current State Income Tax Paid or Payable and Deferred State Income Taxes. Thus, Berkshire Hathaway’s effective state corporate income tax rate paid should be lower than the above 1.20%, and its estimated Total State Corporate Income Tax Loophole Taken should be higher than the above $7,405 mil.
** Union Pacific just disclosed its Current State Income Tax Paid or Payable from 1998 to 2006, and thus its estimated Total State Corporate Income Tax Loophole Taken will be much higher than the above $785 mil. Union Pacific generated Total Pretax Income for the most recent three years of $9.7 bil. If its effective State Corporate Income Tax Rate Paid for those three years remained at the above 1.09% previous years’ average, then its estimated Total State Corporate Income Tax Loophole Taken would increase by $649 mil to $1,434 mil.
For the most recent six years, the related estimated total State Corporate Income Tax Loopholes Taken, as I have defined them above, by these 4 large Nebraska Corps, was $6.1 bil, as compared to $9.0 bil for the past twelve years shown above.
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 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 refundable investment tax credit.
