In performing a quick review of SEC filings of large corps with an SEC State Location Code in Pennsylvania, I found 17 Corps with pretty large State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years.
ACE, Ltd. was included in the below list. It was established in the Cayman Islands tax haven jurisdiction, with HQs located in Bermuda. In 2008, it was relocated to Switzerland. PriceWaterhouseCooper's Philadelphia office has been its external CPA firm for its financial statements from 2005 on. Previously, its external CPA firm was PriceWaterhouseCooper's New York office.
Tyco Electronics, Ltd was also included in the below list. It is now a Swiss Corp. It was previously a Bermuda Corp. Its CPA firm is in Philly. The amounts for it below are just for the six years 2004-2009.
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 core pretax income, which are exclusive of large Asset Impairments, both in total for the past twelve years for each of these 17 large Pennsylvania Corps. These 17 large Pennsylvania Corps below had a weighted average state corporate effective income tax rate paid of a very modest 1.98%, or a huge 80% discount to Pennsylvania’s current state corporate income tax rate of 9.99%.
….……………………............Current…….Core............State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
17. Sunoco………................452…......8,819……...5.13%
16. Comcast(2000-2009)..956…….23,671……...4.04%
15. Amerisource Bergen....248…......7,148……...3.47%
14. Hershey..…………..........249….....7,503.....….3.32%
13. PPG Industries.............334…....10,675……...3.13%
12. Mellon Financial..........323…....10,810……...2.99%
11. PNC Financial Svcs…....521…….23,367……...2.23%
10. PPL…...........................222…….10,496……...2.12%
..9. US Steel……………...........97…......5,497……...1.76%
..8. Cigna...........................229……..16,190……...1.41%
..7. Air Products & Chems..129........10,164.….....1.27%
..6. HJ Heinz......................149……..12,707……...1.17%
..5. Rohm&Haas(98-08)......60………..6,392……...0.94%
..4. Alcoa…………...............177……...24,115……...0.73%
..3. Tyco Electronics, Ltd....13...........6,834.........0.19%
..1. Lincoln National.............0*……...8,742……...0.00%
..1. ACE, Ltd.........................0*........16,426.........0.00%
Total all 17……….............4,159…...209,556……...1.98%
* I assumed no state income tax was paid, since there was nothing disclosed about it.
For the most recent year, the weighted state corporate effective income tax rate paid by these large Pennsylvania Corps was a much lower 0.55%.
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 17 large Pennsylvania Corps 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 Pennsylvania Corporate Income Tax Rate of 9.99% by the total Consolidated Core Pretax Income of each large Pennsylvania Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................PA……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. Alcoa………….......…………..9.99%......0.73%...........2,232
2.. PNC Financial Services....9.99%.......2.23%...........1,813
3.. Comcast…………….............9.99%......4.04%...........1,409
4.. Cigna......……………………...9.99%.......1.41%...........1,388
5.. ACE, Ltd..........................9.99%.......0.00%..........1,150
6.. HJ Heinz…………….............9.99%.......1.17%..........1,120
7.. Air Products & Chemicals.9.99%.......1.27%.............886
8.. Lincoln National......………9.99%.......0.00%............873
9.. PPL………………………….......9.99%.......2.12%.............827
10. Mellon Financial……........9.99%.......2.99%............757
11. PPG Industries....…………..9.99%.......3.13%.............732
12. Tyco Electronics, Ltd.......9.99%.......0.19%.............670
13. Rohm & Haas………….........9.99%.......0.94%.............579
14. Hershey…………………........9.99%.......3.32%.............501
15. Amerisource Bergen.........9.99%......3.47%.............466
16. US Steel……………………......9.99%.......1.76%.............452
17. Sunoco..............................9.99%.......5.13%.............429
Total all 17…………………………………………16,285 (yeah, $16.3 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $10.8 bil, as compared to $16.3 bil for the past twelve years.
And below here is a listing of the 10 Pennsylvania Mid-sized Corps with Total Core Pretax Income for the most recent 6 years of at least $2 bil each, but which had Total Core Pretax Income for the most recent 12 years of less than $5 bil, and thus weren’t included in the above list of the 17 Very Big Pennsylvania Corps.
.............................................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)
Allegheny Technologies...............82.............3,283.........2.50%
CONSOL Energy..........................108.............3,232.........3.34%
Allegheny Energy.........................50.............2,748.........1.82%
American Eagle Outfitters...........133.............2,638.........5.04%
UGI.............................................112.............2,602.........4.30%
SEI Investments...........................36.............2,370.........1.52%
EQT...............................................19.............2,259.........0.84%
Mylan Labs...................................90.............2,213.........4.07%
Universal Health Services.............83.............2,079.........3.99%
Endo Pharmaceuticals..................56..............2,020.........2.77%
PA Total for all 10.....................769............25,444.........3.02%
When you review the above two lists of the 27 Very Big and Mid-sized Pennsylvania Corps, you have to be impressed with the quality and superb financial performance.
But this strong financial performance is but a drop in the bucket in comparison to what has been going on with US Big Oil and Gas Corps. There has been a massive income shift in the past decade from non-Big Oil and Gas Corps to Big Oil and Gas Corps, which has been devastating to all non-Big Oil and Gas businesses.
To illustrate how this massive income shift in the past decade has applied to Pennsylvania, the Total Core Pretax Income for the above 17 Pennslyvania Most Profitable Very Big Corps of $35.5 bil for the most recent two years was up 37% from the $25.9 bil earned a decade earlier. Also, there were 11 Most Profitable Very Big Pennsylvania non-Big Oil and Gas Big Corps, from the above list of 17, which were in existence for the entire past 12 years. The Total Core Pretax Income for these 11 Pennslyvania non-Big Oil and Gas Big Corps of $22.0 bil for the most recent two years was up only 4% from the $21.2 bil earned a decade earlier.
On the other hand, the 35 US Oil and Gas Big Corps, 25 of which are based in Texas, generated Core Pretax Earnings of $373.7 bil for the most recent two years, which was an incredible 712% increase from the $46.0 bil earned a decade earlier. I'm not kidding!
Clearly, it would be wise for the US government to take action that would reverse this horrible income shift trend, which has severely damaged not just more than 95% of US businesses, but has also devastated US individuals, and all of federal, state and local governments. Not only has it resulted in much higher US unemployment, much higher US underemployment, and lower median US wages, but it also has resulted in a substantially higher portion of a family's take-home pay being used to pay for energy costs than that of a decade ago.
I think it only makes sense for the US government to eliminate the many massive tax loopholes that are granted to Big Oil and Gas Corps to reward them for generating these windfall profits. And the money raised here should be given as wise, lucrative tax incentives to all US businesses that effectively reduce their energy costs.
Such a tax plan, is a ten-fer:
.....higher US real GDP growth
.....lower US unemployment
.....lower US underemployment
.....higher US median wages
.....lower portion of take-home pay needed to fund energy costs
.....higher after-tax corporate profits for more than 95% of US businesses
.....significant reduction in the US deficit
.....better State government coffers
.....more competitive US firms
.....and a huge step toward US becoming energy independent
Now on to updating Illinois, and then to other parts of the Midwest.
