In performing a quick review of SEC filings of large corps with an SEC State Location Code in Connecticut, I found 9 corps with State Corporate Income Tax Loopholes Taken, at least the way I measure them, of at least $200 mil each, in the last dozen years.
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 9 Big Connecticut Corps. These 9 Big Connecticut Corps below had a weighted average state corporate effective income tax rate paid of an incredibly low 1.40%, or a massive 81% discount to Connecticut’s current state corporate income tax rate of 7.50%.
….……………………..................Current…………………......State
….……………………....................State...Consolidated..Effective
….……………………....................Tax……….Pretax………Tax Rate
….……………………....................Paid……..Income……….Paid
….……………….…....................(Millions of Dollars)
..9. Pitney Bowes....................411............8,793.........4.67%
..8. UST..................................214............6,367.........3.36%
..7. Aetna…………………….........462…….....16,827……..2.75%
..6. Xerox……………..................126……......7,590………1.66%
..5. GE..................................3,156........235,906.….....1.34%
..4. United Technologies.........487……....48,572……...1.00%
..3. Praxair...............................94…….....11,952…......0.79%
..2. Interactive Brokers Grp……..8….........5,550……...0.14%
..1. Hartford Financial Services…0….......12,528……...0.00%
Total all 9………....................4,958….....354,085……...1.40%
For the most recent six years, the weighted state corporate effective income tax rate paid by these 9 Big Connecticut Corps was an even lower 1.11%.
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 9 Big Connecticut 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 Connecticut Corporate Income Tax Rate of 7.50% by the total Consolidated Pretax Income of each Big Connecticut Corp for the last twelve years. Then, I subtracted the actual total State and Local Corporate Income Taxes Paid by each of these Corps for the same twelve years.
………………………........................CT…….....State……..Resultant
………………….........…............Corporate…Effective.......Higher
………………….........…………........Tax……..Tax Rate…...State Tax
………………..........…………..........Rate……....Paid…....Last 12 Years
…………………………………………………….................(Millions of dollars)
1.. GE………..............................7.50%.......1.34%.........14,537
2.. United Technologies ..........7.50%.......1.00%..........3,156
3.. Hartford Financial Services.7.50%......0.00%.............940
4.. Praxair….............................7.50%......0.79%.............802
5.. Aetna…...............................7.50%......2.75%..............800
6.. Xerox……………………............7.50%......1.66%..............443
7.. Interactive Brokers Group…7.50%......0.14%.............408
8.. UST.....................................7.50%.......3.36%.............264
9.. Pitney Bowes.......................7.50%.......4.67%.............248
Total all 9………………………………………….21,598 (yeah, $21.6 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken by these 9 Connecticut Big Corps was $13.2 bil, as compared to $21.6 bil for the past twelve years.
So just how does Connecticut Big Corps’ low effective corporate state income tax rate paid stack up against other large States? Well, only Indiana clearly surpasses Connecticut in being a Corporate State Income Tax Haven for its Big Corps.
Here is a summary of the effective State Corporate Income Tax Rates Paid by Big Corps in all 18 US States where their Big Corps generated more than $100 bil of Total Core Pretax Income over the most recent 12 years:
.....................................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)
Indiana...................6..........1,280.........100,120......1.28%
Connecticut.............9.........4,958.........354,085......1.40%
Texas....................44........19,743......1,377,291......1.43%
Nebraska................4...........2,209.........152,159......1.45%
Michigan.................7..........1,752.........106,479......1.65%
Washington.............9..........6,168.........324,385......1.90%
Pennsylvania.........17..........4,159.........209,556......1.98%
Illinois..................24........10,960.........491,682......2.23%
Ohio......................17.........7,321..........321,950......2.27%
New Jersey...........18........12,217.........534,077......2.29%
Virginia..................9..........3,422.........132,009......2.59%
Georgia.................10..........8,543.........323,370......2.64%
New York..............45........42,291.......1,583,149......2.67%
California..............41.........31,961......1,175,517......2.72%
Minnesota.............14..........8,555.........309,056......2.77%
Arkansas.................4..........5,896.........208,554......2.83%
North Carolina.......13........12,355.........395,255......3.13%
Missouri..................8..........3,303........101,428.......3.26%
Of the above 18 States, three of them (Texas, Washington and Ohio) don’t have State Corporate Income Taxes. Thus, more to the point, here are the Percentage Discounts that the Effective State Corporate Income Tax Rates Paid are to the Statutory State Corporate Income Tax Rate at the beginning of 2011 of the Big Corps in the remaining 15 large States:
..............................Effective.......State........State
...........................State&Local..Corporate.....Tax
...............................Income.....Income....Loophole
..............................Tax Rate........Tax......Percentage
................................Paid...........Rate.......Discount
.1. Indiana................1.28%........8.50%........85%
.2. Nebraska.............1.45%........7.81%.........81%
.3. Connecticut.........1.40%........7.50%........81%
.4. Pennsylvania.......1.98%........9.99%........80%
.5. New Jersey..........2.29%........9.00%.......75%
.6. Michigan..............1.65%........6.04%.......73%
.7. Minnesota...........2.77%........9.80%.......72%
.8. Illinois................2.23%.........7.30%.......69%
.9. California............2.72%........8.84%........69%
10. New York...........2.67%........7.10%*......62%
11. Virginia..............2.59%........6.00%........57%
12. Arkansas............2.83%........6.50%........56%
13. Georgia..............2.64%........6.00%........56%
14. North Carolina....3.13%........6.90%........55%
15. Missouri.............3.26%........6.25%........48%
* It should be pointed out that City and County Statutory Income Tax Rates are not included above, even though these income taxes paid are included in the above Effective State and Local Income Tax Rates Paid. Thus the above Percentage Discounts should be much higher for States, like New York, that have a significant City or County Income Tax Rate.
And below here are the 5 Medium-sized Connecticut Corps, with Pretax Core Income for the most recent 6 years of more than $2 bil, but with Pretax Income for the past 12 years of less than $5 bil, and thus not included in the earlier shown 9 Big Connecticut 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)
WR Berkley...............................0.............4,199........0.00%
Odyssey Re Holdings................0.............3,099.........0.00%
Amphenol..............................44*............2,480.........1.77%
IMS Health.............................41*............2,334.........1.76%
Stanley Black & Decker............51.............2,054.........2.48%
CT Total for all 5.................136...........14,166.........0.96%
* Includes both State Current Income Taxes and State Deferred Income Tax Expense
Connecticut’s Big Corps, as well as its residents, have been hurt severely by high energy costs. It think the Obama Administration’s Energy Tax Credit Proposal for all businesses that make Green Energy Commercial Building Upgrades is one that would really help Connecticut.
It’s 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
