In thoroughly studying financial statements of Big Financial organizations, I am just amazed at how many large Financial Partnerships I have run across.
And so many of these Financial Partnerships are extremely profitable, particularly on an after-tax basis, since they pay so little in US federal income tax.
Just to cite one here of the many, New York-based KKR generated Pretax Income of $7.9 bil in 2010 and another $6.9 bil in 2009. So what was KKR’s Total Income Tax Expense for those two years combined? Would you believe only $112 mil? It’s true.
And there are so many huge Big Financial Hedge and Big Financial Trading firms.
Also, there are so many huge Mutual Insurance Companies that pay so little in US federal income taxes.
Let me give some brief information of just three of them.
New York Life Insurance generated Pretax Income of $2.5 bil in 2010 and another $1.8 bil in 2009. How much current federal income tax did it pay for those two years combined? Would you believe only $145 mil? It’s true. New York Life also has Total Equity at Dec 31, 2010 of a monstrous $25.5 bil.
USAA, based in Texas, generated Pretax Income of $3.6 bil in 2010 and another $4.3 bil in 2009. And its Total Equity at Dec 31, 2010 is $18.7 bil.
Liberty Mutual Group, based in Massachusetts, generated Pretax Income of $2.3 bil in 2010 and another $1.2 bil in 2009. And its Total Equity at Dec 31, 2010 is $17.0 bil.
In addition to the above three, here are another ten of the many Big Mutual Insurance Companies, paying so little in US federal income tax:
Illinois-based State Farm
Massachusetts-based MassMutual
NY-based TIAA
Ohio-based Nationwide Insurance
Rhode Island-based FM Global
Wisconsin-based Northwestern Life
Wisconsin-based American Family Insurance
California-based Pacific Life Insurance
NY-based Guardian Life Insurance
Nebraska-based Mutual of Omaha
When the country faces such an incredibly high debt, I think the last thing we want to do is to permit any of these Big Financial Partnerships, Hedging and Trading Companies and Big Mutual Insurance Companies, which are paying so little in US federal income taxes, to be able to do that.
My proposal here is that all Big Financial Partnerships and Big Financial Hedge and Trading Firms, which are paying so little in US federal income tax, should be taxed, for federal income tax purposes, as a normal corporation would be.
Also, I think that all annual excess profits of Mutual Insurance Companies should be federal income taxed. And an excessive hoarding of Equity by these Mutual Insurance Companies should also be federal income taxed.
The Feds can determine what an excess amount of profits and equity would be for these Big Mutual Insurance organizations.
All of the tax proceeds raised here should be used to reduce the massive US debt.
