This post updates my earlier post on Nebraska 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 Nebraska, I found 4 large corps with Total Consolidated Core Pretax Income of more than $5 bil each, for the most recent 12 years. My definition of Core Pretax Income excludes large Asset Impairment Charges.
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 core 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 1.45%, or a huge 81% 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................286….........12,143……......2.36%
..2. Berkshire Hathaway……1,339*……...111,960……......1.20%*
..1. Union Pacific…...............341**..........21,893……......1.56%
Total all 4………..................2,209…........152,159……......1.45%
* 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’s State Income Tax Payable for 2007 was estimated based on State vs. Federal Income Tax Payable mix trends in the two years just before and just after 2007.
For the most recent year, the effective state corporate income taxes paid rate by these 4 large Nebraska Corps was an even lower 1.20%.
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%.......1.56%............1,369
3.. ConAgra Foods…................7.81%.......2.71%..............662
4.. TD Ameritrade…………………7.81%.......3.94%..............238
Total all 4………………………………………9,675 (yeah, $9.7 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.
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 $6.7 bil, as compared to $9.7 bil for the past twelve years shown above.
So just how does Nebraska Big Corps’ low effective corporate state income tax rate paid stack up against other large States? Well, only Indiana clearly surpasses Nebraska 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.
The devastation of the US economy hasn’t hit Nebraska hard. Its State Unemployment Rate in Dec 2010 was only 4.4%. Businesses in Nebraska are also doing pretty well. This shows the high correlation between how businesses are doing in a State and the State’s unemployment rate. A very similar trend occurred in the State of Minnesota.
I still think that Nebraska would benefit from the Obama Administration’s Energy Tax Credit proposal on business investments in Green Energy Commercial Building Retrofit Upgrades.
