This post updates my earlier post on Florida Big Corps and state corporate income taxes paid.
In performing a quick review of SEC filings of large corps with an SEC State Location Code in Florida, I found 7 Florida Corps with Total Consolidated Pretax Income of more than $5 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 and local corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 7 large Florida Corps. These 7 Florida Corps below had a weighted average state corporate effective income tax rate paid of a modest 2.06%, or a hefty 63% discount to Florida’s low current state corporate income tax rate of 5.50%.
….……………………...........................Current………………….......State
….…………………….............................State....Consolidated..Effective
….…………………….............................Tax………..Pretax…….Tax Rate
….…………………….............................Paid……...Income……….Paid
….……………….….............................(Millions of Dollars)
..7. Publix Super Markets…………......647.…….14,783…….....4.38%
..6. AutoNation……………………..........219.……...5,382*……....4.07%
..5. Fidelity National Financial.........268**…...7,268……......3.69%
..4. CSX….........................................255……...12,133……......2.10%
..3. FPL Group..................................281***...16,103…….....1.75%
..1. Royal Caribbean****……….............0………..5,157………..0.00%
..1. Carnival*****……………..................0………20,192………..0.00%
Total all 7………............................1,670…......81,018…….....2.06%
* Exclusive of Asset Impairment Charges of $2.1 bil
** Both current state income tax and deferred state tax expense combined
*** Also includes provision for unrecognized state income tax benefits
**** Royal Caribbean is a Liberia Corp, with an SEC location code in Florida, and with both an SEC business and mailing address in Miami, FL
***** Carnival is a Panama Corp, with an SEC location code in Florida, and with both an SEC business and mailing address in Miami, FL
And below here are the 10 Medium-sized Florida Corps, with Pretax Core Income for the most recent 6 years of more than $1.7 bil, but with Pretax Income for the past 12 years of less than $5 bil, and thus not included in the above 7 Big Florida 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)
Harris Corp................................91..........3,333..........2.73%
Darden Restaurants..................144.........3,053..........4.72%
Health Management Associates..77.........2,155..........3.57%
Ryder System.............................40.........2,036..........1.96%
Raymond James Financial..........91..........1,978..........4.60%
Lender Processing Services........91..........1,880..........4.84%
Fidelity National Info Services...91..........1,856..........4.90%
TECO Energy..............................38..........1,835..........2.07%
Roper Industries........................37..........1,794..........2.06%
Office Depot................................50..........1,742..........2.87%
FL Total for all 10.....................750........21,662..........3.46%
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 either drastically 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.
I think I would target wise energy tax credits for businesses. Florida businesses have been crushed by sky-high energy costs. Florida businesses and residents get a double whammy from Big Oil. First, they get whacked by monstrous energy costs, that pad the bottom-line profits of US Big Oil, whose core pretax earnings are up 712% in the past decade. And second, they get piled on, due to the devastating aftershocks of the Gulf Oil spill.
There is one thing I am really befuddled by. The Florida State Governor wants to reduce Florida’s State Corporate Income Tax Rate from 5.5% to 3.0%. The 5.5% is one of the very lowest in the country. But as you can see from the above, the 7 largest Florida Corps are paying only a 2.06% effective state corporate income tax rate. So the idea to balance Florida’s State Budget is to reduce this already low 2.06% effective state corporate income tax rate paid even more? The math just doesn’t work out. I think Florida’s Governor is understating the financial wisdom of Florida residents.
Looking at how the US government could help out the State of Florida, I think 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 tax expensing, or they could instead choose a refundable investment tax credit. The reason it is better for companies to have this choice is that 100% tax expensing of equipment doesn’t economically benefit companies that are in a tax loss situation.
In the Florida Gulf Region directly impacted by the Gulf Oil spill, I think I would give bonus investment tax credit percentages for capital expenditures made, and I would also give bonus tax depreciation for real property additions made in the rental property, retail, lodging and leisure industries.
In a very positive development for States like Florida, I do like it that the Obama Administration seems to be now putting additional pressure on both Fannie Mae and Freddie Mac to write down the home mortgage loan principal balances of underwater home properties. When you think about it, Fannie Mae and Freddie Mac are now in essence the US government.
The greedy large banks, like Wells Fargo, Bank of America and JPMorgan Chase, still are reluctant to write down their mortgage loan principal balances on underwater properties, particularly so on second mortgages. I think I would reluctantly consider giving these selfish banks a federal tax incentive to do so, such as a temporary acceleration of their federal income tax loan loss provision deduction. This can be easily structured at no CBO scored cost to the US Government over the ten-year CBO scoring period.
In another very positive development for States like Florida, the FASB has changed its position on how financial institutions are to carry some of their loans on their balance sheets, switching from a fair market value approach to an amortized cost approach. I think the FASB’s previous accounting position contributed significantly to both the severity of the original US financial crisis, as well as to the extremely prolonged nature of this horrible financial crisis.
