US 4th Biggest Corps: Tax Loophole Perspectives

In my most recent three posts, I summarized key financial information related to the 24 largest US Corps, with Worldwide Pretax Income exceeding $10 bil each in the most recent year, to the 30 second largest US Corps, with Pretax Income between $5 bil and $10 bil, and to the 43 third largest US Corps, with Pretax Income between $3 and $5 bil.

In this post, I will summarize similar key financial information related to the 41 fourth largest US Corps, with Worldwide Pretax Income between $2 bil and $3 bil each in the most recent year.

Here is the detailed information for these 41 fourth most profitable US Corps:

..............................................................US........Effective
...........................................................Current........US
...........................................................Federal.... Federal
..........................................................Income......Income
...........................................World.........Tax...........Tax
............................................Wide.........Paid..........Rate
.............................................PTI........(Benefit)......Paid
............................................(mils of dollars)

Multinational Corps
Chubb................................2,988..........436.........14.6%
Accenture..........................2,914..........303.........10.4%
Loews................................2,902..........154...........5.3%
Emerson Electric...............2,879..........230...........8.0%
Nike...................................2,844..........289.........10.2%
Honeywell......................2,843........(471)......(16.6)%
Dow Chemical...............2,802........(576).....(20.6)%
Mastercard........................2,757..........379.........13.7%
Halliburton........................2,655..........400.........15.1%
EMC...................................2,608..........518.........19.9%
Kimberly Clark...................2,550..........368.........14.4%
Alcon.................................2,527..........313.........12.4%
Southern Copper................2,431............40...........1.6%
Viacom(1)..........................2,417..........427.........17.7%
Natl Oilwell Varco..............2,397..........421.........17.6%
Illinois Tool Works.............2,212..........429.........19.4%
Ebay..................................2,098.........(131)........(6.2)%
State Street Corp...........2,086........(885).....(42.4)%
Best Buy.............................2,078..........689.........33.2%
Franklin Resources............2,070..........426.........20.6%
Costco...............................2,054..........445..........21.7%
Danaher.............................2,052..........388.........18.9%
Total 22 Multinationals....55,164.......4,592...........8.3%

Predominantly Domestic Corps
Chesapeake Energy......2,884.............0..........0.0%
Aetna...............................2,644...........556..........21.0%
Public Service Ent Grp......2,616..........(166).........(6.3)%
Northrop Grumman.........2,595...........500..........19.3%
CSX..................................2,546...........451..........17.7%
Nextera Energy................2,489.............11...........0.4%
Raytheon.........................2,432...........205...........8.4%
General Mills....................2,428...........370..........15.2%
Norfolk Southern.............2,367...........492..........20.8%
Medco Health Solutions...2,334...........842..........36.1%
HSBC USA........................2,300..........175...........7.6%
FedEx............................2,265............79..........3.5%
Hartford Fincl Services....2,264...........134...........5.9%
HCA.................................2,231...........401..........18.0%
Duke Energy....................2,210............(5)...........(0.2)%
Time Warner Cable..........2,196...........127............5.8%
Reynolds American.........2,192...........545..........24.9%
TJX.................................2,164............511..........23.6%
Publix Super Markets......2,039...........601..........29.5%
Total 19 Domestic.........45,196.........5,829..........12.9%

Total all 41..................100,360.......10,421..........10.4%

(1) Viacom amounts are for the year ended Dec 2009.

Below here shows the Income Tax paid by 21 large US Multinational Corps to the US Government and to Foreign Governments in the most recent year.

...................................US...........................Foreign
.................................Current......Foreign...Current
...................................Fed..........Current.......Inc
...................................Inc.............Inc...........Tax
...................................Tax............Tax.........Paid
.................................Paid............Paid......(Benefit)
...............................(Benefit).....(Benefit).....Mix
.................................(mils of dollars)

Honeywell.............(471)..........393.........504%
Dow Chemical.......(576).........765.........405%
Ebay........................(131).............92........236%
State Street Corp...(885)..........156.........121%
Southern Copper.....40...........844..........95%
Loews.........................154...........239...........61%
Nike...........................289............441...........60%
Accenture..................303...........437...........59%
Emerson Electric........230...........313...........58%
Natl Oilwell Varco.......421...........448...........52%
Kimberly Clark............368...........337..........48%
Mastercard.................379...........301..........44%
Halliburton................400...........287..........42%
Illinois Tool Works.....429...........270..........39%
Chubb........................436...........242...........36%
Costco.......................445...........200...........31%
Viacom......................427..........179...........30%
Franklin Resources....426...........115...........21%
Danaher.....................388.............93..........19%
EMC...........................518...........120..........19%
Best Buy.....................689............92..........12%

Total 21 Multi-natls.4,279......6,364..........60%

Yeah, these 21 Multinational Corps have paid 49% more in total foreign income taxes than they have in total US Federal Income Taxes in the most recent year.

Focusing on which of these large US Multinational Corps are taking the most advantage of tax loopholes, which permits them to pay so little in US Federal Income Taxes, below are the 11 of them, whose US Federal Income Tax Paid Mix (i.e. US as a % of Worldwide) is significantly lower than their US Pretax Income Mix:

...................................US................................US
.................................Current..........................Tax
...................................Fed.............................Paid
...................................Inc............US...............vs
...................................Tax............PTI..........Income
...................................Mix...........Mix..........Spread

Honeywell................(604)%........44%..........(648)%
Ebay.........................(336)%........40%..........(376)%
Dow Chemical...........(305)%.......(29)%.........(275)%
State Street Corp.......(121)%........36%...........(157)%
Duke Energy.................(4)%........78%............(82)%
FedEx..........................29%.........79%............(51)%
Loews..........................39%.........77%............(38)%
Mastercard.................56%..........80%............(24)%
Halliburton.................58%.........72%............(14)%
Viacom.......................70%.........82%............(12)%
Kimberly Clark............52%.........63%............(11)%

And below here are the 23 fourth largest US Corps, with at least some international presence, which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Revenue Mix.

....................................................................US
.................................................................Income
......................................US...........US...........vs
.....................................PTI...........Rev.........Rev
.....................................Mix..........Mix.......Spread

Dow Chemical...........(29)%.......33%.......(62)%
Southern Copper........0%..........25%.......(25)%
State Street Corp.......36%..........58%.......(23)%
Accenture..................18%..........36%.......(18)%
Honeywell.................44%.........59%.......(15)%
Duke Energy..............78%.........92%.......(13)%
Franklin Resources..56%.........67%.......(11)%
Costco..........................69%..........76%.........(7)%
Ebay............................40%..........46%.........(6)%
Nike.............................38%..........43%.........(5)%
Natl Oilwell Varco........30%..........34%.........(3)%
EMC.............................54%..........54%...........0%
Emerson Electric.........45%..........43%............2%
Best Buy......................78%..........74%............4%
TJX.............................84%..........77%............6%
General Mills...............88%..........81%............8%
Alcon..........................52%..........43%............9%
FedEx..........................79%..........70%...........9%
Kimberly Clark............63%..........53%..........10%
Viacom.......................82%..........72%..........10%
Illinois Tool Works......56%..........42%..........14%
Halliburton.................72%..........46%..........27%
Mastercard.................80%..........42%..........38%

And below here are the 20 fourth largest US Corps, with at least some international presence, which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Asset Mix.

....................................................................US
.................................................................Income
......................................US...........US...........vs
.....................................PTI.........Asset.......Asset
.....................................Mix.........Mix........Spread

Dow Chemical..........(29)%......48%........(77)%
Ebay...........................40%........89%........(48)%
State Street Corp.......36%........71%........(35)%
Honeywell.................44%........75%........(31)%
Natl Oilwell Varco....30%........57%........(26)%
Nike............................38%........61%........(23)%
Franklin Resources.56%........76%........(19)%
Duke Energy.............78%........94%........(16)%
Accenture.................18%........30%........(12)%
FedEx........................79%........90%........(11)%
Emerson Electric....45%........56%........(11)%
Viacom........................82%.........91%..........(9)%
Costco.........................69%.........77%..........(8)%
Alcon..........................52%.........53%..........(1)%
General Mills...............88%.........82%...........6%
Best Buy......................78%.........72%...........7%
Illinois Tool Works......56%.........49%...........7%
Kimberly Clark............63%.........51%..........12%
Halliburton.................72%.........59%..........14%
TJX.............................84%.........69%..........14%

From a quick review of the above two charts, there were five corps that had fairly positive patriotic ratings: Kimberly Clark, Halliburton, Illinois Tool Works, General Mills, and Mastercard.

However, there were many more (9) corps with even much higher negative patriotic ratings: Dow Chemical, State Street Corp, Honeywell, Accenture, Southern Copper, Franklin Resources, Duke Energy, National Oilwell Varco, and Nike.

When I get some time, I will research similar information related to the many Big US Corps with Worldwide Pretax Income ranging from $1 bil to $2 bil in the most recent year. It should be interesting.

===========================================

When I consolidate all 138 of the Big US Corps with Pretax Income above $2 bil in the most recent year, here's what I get:

US Federal Income Tax Paid........$79,955 mil
Consolidated Pretax Income.....$905,898 mil
Effective Tax Rate...............................8.8%

At the end of the Clinton Presidency in 2000, the US was clearly a Democracy.

But history will show that the US is now in essence operating as a Power-Obsessed Plutocracy/Aristocracy, where the giant US Corps are the ruling Plutocrats/Aristocrats, and the Republicans in the US Congress are the Enabling Serfs.

As you can see from the above extremely modest 8.8% US Federal Income Tax Rate Paid, the Plutocrats/Aristocrats have clearly won out on the taxpaying front.

And the Power-Obsessed Plutocrats/Aristocrats have clearly turned much of the many non-Aristocrats into US peasants.....and many of them are college-educated peasants.

The Big Corp Power-Obsessed Plutocrats publicly say they are for US job creation, but they have widely caused high US unemployment with their massive shipping of US jobs overseas.

Most of the Big Corp Power-Obsessed Plutocrats love the current horrible US unemployment, US underemployment, and US low median wage situation. It permits them to pay paltry wages, give modest pay increases, and easily find replacement employees on the cheap. It also results in extremely hard-working, loyal employees, who are absolutely scared to death of losing their widely-coveted jobs.

Also, the Big Corp Power-Obsessed Plutocrats even now have majority control of the US Supreme Court. The Citizens United Decision was just huge in aiding the dominance of the Big Corp Plutocracy/Aristocracy.

The Bush/Cheney Presidency and the US Congress has turned the country into a Power-Obsessed Plutocracy.

The Obama Administration is attempting to turn the country back from a Power-Obsessed Plutocracy to a Democracy, but has gotten intense resistance from every front, and thus it still has a very long way to go. The only way this is going to get done is with much help from the people hitting the Streets.

Clearly the Republican-controlled US House, but also the Republicans in the US Senate with their filibuster power, and even aided by a handful of Democrats, have been able to prevent the Obama Administration from turning the country back from a Power-Obsessed Plutocracy to a Democracy.

And to perpetuate this Big Corp Plutocracy/Aristocracy, there is nothing that the ruling class desires more than to have as the next US President, a true Power-Obsessed Plutocrat/Aristocrat in his own right, Mitt Romney.

When you look at Webster's definition of either a Plutocrat or an Aristocrat, they both fit Romney to a tea. And Romney has even publicly and proudly proclaimed that Big Corps are "people".

But what the Big Corp Power-Obsessed Plutocrats/Aristocrats have overlooked in their intense myopic focus on greed is that Aristocracies and Plutocracies have always ended up turning ugly for the power obsessed.

The start here you are now seeing in the Streets of Manhattan.

If the Power-Obsessed Plutocracy/Aristocracy get their wish in the Supercommitee Negotiations, I am afraid it is going to get really ugly for the Power-Obsessed Plutocrats/Aristocrats, of course in a nonviolent kind of way. There will be a massive movement unlike the Plutocrats/Aristocrats have ever seen before.

Here's what the Big Corp Power-Obsessed Plutocrats/Aristocrats want.....a dramatic reduction in the US Corporate Federal Income Tax Rate from 35% to something like 25%. They know that such an approach is unfair to all other businesses, as well as to all US individuals, but they don't care.....they are the ruling Plutocracy/Aristocracy.

And even after shipping all of these US jobs overseas and paying such a meager income tax rate on the related foreign earnings in the foreign tax haven, these Big Corp Power-Obsessed Plutocrats/Aristocrats are now demanding that they be allowed to repatriate all (nearly $2 trillion at the end of 2011) of their low-taxed foreign earnings back to the US in a tax holiday. That's egregiously piling on, in addition to pouring salt on the wounds of all of the former US employees and US supplier employees laid off by the US Corps moving their jobs overseas.

All 6 Republicans on the Supercommittee are Big Corp Power-Obsessed Plutocratic/Aristocratic facilitators.

House Speaker John "Procter & Gamble" Boehner picked the 3 Republican House members.

The Republican head, Texan Jeb Hensarling, is controlled by Rex Tillerson, the CEO of Exxon Mobil.....and the two Michigan House Republican Supercommittee members, Dave "Dow Chemical" Camp and Fred "Whirlpool, the Outsourcer" Upton, are both owned by Big Corps.

Mitch "Humana" McConnell picked the 3 Republican Senators on the Supercommittee, who are also all in tune with the Big Corp Aristocratic tax strategy, and are led by Jon "Business Roundtable" Kyl.

All 6 Republicans on the Supercommittee say they are for small business, but their actions have always shown their allegiance to the Big Corp Power-Obsessed Plutocracy/Aristocracy, rather than to small businesses, which drive US job creation.

And there is a Democrat on the Supercommittee who played a key role in facilitating the turn of the US from a Democracy to a Plutocracy/ Aristocracy, with his US Tax Policy during the 2000s.....Max Baucus, the head of the US Senate Finance Committee.

And right out of the gate, Baucus has been quick to emphasize how complex Tax Reform is, and thus how difficult it would be to enact.....clearly a strategy to keep the Big Corp Power-Obsessed Plutocracy/Aristocracy favored status quo on US Tax Policy. Frankly, I don't think it would be that difficult to enact wise, fair, truly job-creating Tax Reform.

Baucus also was only one of just a couple of Democratic Senators who voted last year against wise job-creating tax legislation which would have served as a clear deterrent to prevent companies from shipping US jobs overseas.

So right now we have 7 votes for Plutocratic/Aristocratic-favored Tax Reform. But I like it that of the 12, we have two on the other side (John Kerry and Chris Van Hollen) who stand out as being extremely bright, great negotiators, true patriots, and are clearly a cut above all of these 7 on the other side.

You can still win this Big Game even though you start out as a smaller team if two of your players on your side are Michael Jordan and Scottie Pippen, both playing in their prime. And then it really helps when the smaller team also has the fans on their side.....in this case, all the people hitting the Streets.

It is so obvious what is needed to make a major dent in the horrible US joblessness problem.

You kill all of the corporate tax loopholes, except for the one that clearly is a very effective job creator, the R&D tax credit.

Then you dramatically reduce federal income tax rates on all business income, of both C Corps and of all business pass thru entities.

And you put massive tax rate reductions on lower amounts of business income. After all, this is what drives US job creation.

All businesses, large and small, will fairly get the tax benefits on these lower amounts of business income. But the Big Corp Power-Obsessed Plutocrats/Aristocrats want it all.

To maximize US job creation, and also make a nice dent in the US Debt level, I think a tax rate scheme on all business income, something like the below, makes sense.

............................................................Regular
Taxable Income Range.................Business Tax Rate

.....first $100,000.................................10%
.....$100,000 to $500,000...................14%
.....$500,000 to $1 mil.........................18%
.....$1 mil to $10 mil..............................22%
.....$10 mil to $100 mil.........................26%
.....$100 mil to $1 bil............................30%
.....above $1 bil.....................................34%

And to really make economic growth and job creation explosive, what should be done is putting in some huge front end tax acceleration deductions in the year just before the above lower US Federal Income Tax Rates take effect. A really fine initiative here would be extremely accelerated tax depreciation on all new buildings and on all existing building improvements, and not just manufacturing buildings.

What makes this explosive stimulus is not just the new construction jobs added from the building investment, but that businesses making the building investment get to front end the tax deduction on the building improvement at a 35% tax rate, but yet get the future earnings stream from this building investment income taxed at the much lower federal income tax rates prevailing after Tax Reform is enacted.

However, in addition to permanently lowering the US Federal Income Tax Rates on all US business income, it is critical that this be accompanied by a very healthy US corporate federal minimum income tax, with progressive minimum tax rates applied as worldwide pretax income of each Big Business rises.

In all fairness, there should be an annual level of worldwide pretax income that the minimum tax would not apply to, such as the first $100 mil earned in each year by each US business.

Then I would enact a very progressive annual minimum tax rate scheme, like that shown below here, on the GAAP Worldwide Pretax Earnings of all US businesses, which are unpatriotically and clearly overdosing in shifting income and the related US jobs overseas.

.....................................................Minimum
Worldwide Pretax Income.......Business Tax Rate

1st $100 mil.....................................0%
$100 mil to $1 bil.............................5%
$1 bil to $5 bil................................10%
$5 bil to $10 bil..............................15%
$10 bil to $20 bil...........................20%
Over $20 bil...................................25%

Thus, a Big US Multinational Corp would pay an additional US Federal Income Tax only if the tax computed under the above minimum tax scheme exceeds the regularly computed tax.

But the Big Corp Power-Obsessed Plutocrats/Aristocrats will fight this tooth and nail, even though it will make a major dent in the US unemployment and US underemployment problem.

I'm betting that the US small businesses will be on the side of the non-Plutocrats/Aristocrats here. And so will the purely domestic US businesses.

US 3rd Biggest Corps: Tax Loophole Perspectives

In my most recent two posts, I summarized key financial information related to the 24 largest US Corps, with Worldwide Pretax Income exceeding $10 bil each in the most recent year, and related to the 30 second largest US Corps, with Pretax Income between $5 bil and $10 bil.

In this post, I will summarize similar key financial information related to the 42 third largest US Corps, with Worldwide Pretax Income between $3 bil and $5 bil each in the most recent year.

Here is the detailed information for these 42 third most profitable US Corps:

..............................................................US........Effective
...........................................................Current........US
...........................................................Federal.... Federal
..........................................................Income......Income
...........................................World.........Tax...........Tax
............................................Wide.........Paid..........Rate
.............................................PTI........(Benefit)......Paid
............................................(mils of dollars)

Multinational Corps
Texas Instruments............4,551.........1,347........29.6%
Prudential Financial....4,422........(722).....(16.3)%
NewsCorp.........................4,177...........823.........19.7%
Qualcomm (1)...................4,034...........151...........3.7%
Newmont Mining..............3,997...........214...........5.4%
Gilead Sciences.................3,914...........853..........21.8%
Corning.........................3,845...............0...........0.0%
Caterpillar........................3,750...........247...........6.6%
Medtronic........................3,723...........379..........10.2%
DuPont..........................3,711..........(109).........(2.9)%
Bank of NY Mellon......3,694.........(670).......(18.1)%
ACE, Ltd (2).....................3,667...........443...........12.1%
Kraft Foods...................3,642.............91............2.5%
AFLAC.............................3,585...........349............9.7%
Devon Energy..................3,568...........244............6.8%
Colgate Palmolive (3).......3,430...........427..........12.4%
Dell..................................3,350...........597..........17.8%
Hess...............................3,311.............151............4.6%
Mosaic...........................3,271............135...........4.1%
Bunge Ltd........................3,050.............33............1.1%
Deere...............................3,025...........574.........19.0%
Archer Daniels Midland...3,015............251...........8.3%
Total 22 Multinationals..80,732........5,808...........7.2%

Predominantly Domestic Corps
Visa................................4,638.........1,089.........23.5%
Boeing.........................4,507.............13...........0.3%
Target............................4,495.........1,086.........24.2%
Union Pacific..................4,433...........862..........19.4%
WellPoint.......................4,354.........1,330.........30.5%
Capital One Fincl.......4,330.........(152).........(3.5)%
Travelers.......................4,306...........846..........19.6%
Exelon...........................4,221...........506..........12.0%
US Bancorp....................4,200........1,105..........26.3%
PNC Fincl Services....4,061.........(207).........(5.1)%
MetLife.......................3,958............141...........3.6%
Time Warner..................3,919...........764..........19.5%
Lockheed Martin............3,826...........589..........15.4%
General Dynamics..........3,790...........847..........22.3%
DirecTV.........................3,514............391..........11.1%
Walgreens......................3,373........1,129..........33.5%
Lowe's............................3,228........1,171..........36.3%
Southern Co...................3,066............42.............1.4%
BlackRock......................3,021..........708..........23.4%
AXA Equitable............3,015............34.............1.1%
Toyota Motor Credit.3,003..........(26)........(0.9)%
Total 21 Domestic.........81,258......12,268..........15.1%

Total all 43.................161,990......18,076...........11.2%

(1) Qualcomm's above US Current Federal Income Tax number is adjusted for the estimated cumulative catch up entry related to the change in the treatment for the tax effect of the Unearned Revenue amounts.

(2) ACE, Ltd gets 61% of its revenues and 58% of its profits in North America. The US Federal Income Tax Paid includes all worldwide current income taxes paid.

(3) Colgate Palmolive above US Current Federal Income number also includes US State Income Tax Paid, as well as both US Federal and US State Deferred Income Tax Expense.

There is a clear pattern here.....the larger the US Corp, the lower the effective US Federal Income Tax Rate Paid (ETR), as you can see here below:

......................................................................................ETR

24 Corps with Pretax Income above $10 bil...................7.2%
30 Corps with Pretax Income between $5 and $10 bil....9.8%
43 Corps with Pretax Income between $3 and $5 bil.....11.2%

These incredibly low effective US Federal Income Tax Rates Paid show the dominance of Big Corps over the US Congress and also show how this dominance increases with the size of the Big Corp. Small and medium-sized businesses have no chance in this kind of unfair tax environment.

Visionary US Tax Policy would attempt to reverse the above trend.....it is upside down. US job creation comes from the small and medium-sized firms, not from the US Giant Corps. The tax incentives should be given to the companies creating the US jobs. Just the opposite is happening.

In reviewing the above Predominantly Domestic Corps, clearly there is something wrong with US Tax Policy when some large Financial Institutions have such incredibly low effective tax paid rates, and in some cases even getting Tax Refunds.....specifically, these US Federal Income Tax Rates Paid: PNC Financial a negative 5.1%, Capital One Financial a negative 3.5%, AXA Equitable only 1.1%, and MetLife only 3.6%.

And then look at the incredibly high effective US Federal Income Tax Refund Rates by the US Multinational Financial Corps, specifically these two.....Prudential Financial a negative 16.3%, and Bank of NY Mellon a negative 18.1%.

So, the large US financial institutions cause the US financial meltdown, and then they effectively get rewarded for doing this. The US Congress needs to do its job and properly legislate wise US Tax Policy.

WellPoint paid total State and Local Income Tax in the most recent year of only $29 mil, on US Pretax Income of $4,354 mil, thus an effective tax rate paid of 0.67% (yeah, that's less than a 1% tax rate on 100% US Income). These US State Governments are all under this incredible financial pressure, and WellPoint acts like this, by designing and taking advantage of every State tax dodge they can? No wonder their insurance premiums are so high. There's a culture there.

Focusing on which of these large US Multinational Corps are taking the most advantage of tax loopholes, which permits them to pay so little in US Federal Income Taxes, below are the 12 of them, whose US Federal Income Tax Paid Mix (i.e. US as a % of Worldwide) is significantly lower than their US Pretax Income Mix:

...................................US................................US
.................................Current..........................Tax
...................................Fed.............................Paid
...................................Inc............US...............vs
...................................Tax............PTI..........Income
...................................Mix...........Mix..........Spread

Boeing........................14%...........96%...........(82)%
DuPont.....................(32)%..........26%...........(57)%
MetLife.......................41%...........81%...........(40)%
Devon Energy.............49%..........82%...........(34)%
Corning.......................0%...........25%...........(25)%
Time Warner...............67%..........91%...........(24)%
Mosaic.......................26%...........45%...........(19)%
Kraft Foods.................11%..........29%...........(19)%
DirecTV......................63%..........80%...........(17)%
ArcherDanielsMdlnd..53%..........67%...........(14)%
General Dynamics......89%.........100%...........(11)%
Deere.........................61%...........68%............(6)%

And below here are the 29 third largest US Corps, with at least some international presence, which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Revenue Mix.

....................................................................US
.................................................................Income
......................................US...........US...........vs
.....................................PTI...........Rev.........Rev
.....................................Mix...........Mix......Spread

Hess.............................(3)%...........83%........(86)%
Dell..............................16%...........52%.........(35)%
Bunge Ltd......................1%............23%.........(22)%
Medtronic....................39%...........57%........(18)%
Prudential Financial.....54%...........69%........(15)%
Kraft Foods..................29%...........43%........(13)%
Caterpillar....................21%...........32%........(11)%
DuPont.........................26%...........36%........(11)%
DirecTV.......................80%...........86%..........(6)%
MetLife........................81%...........85%..........(4)%
Newmont Mining.........18%...........22%..........(4)%
ACE, Ltd......................58%...........61%..........(3)%
AFLAC.........................22%..........24%..........(2)%
Corning........................25%..........26%...........0%
Bank of NY Mellon........64%..........64%...........0%
Travelers....................100%..........94%...........6%
BlackRock.....................74%..........67%...........7%
Devon Energy...............82%..........73%...........9%
Mosaic..........................45%..........35%..........10%
Deere............................68%..........56%..........12%
Gilead Sciences.............65%...........53%..........12%
Colgate Palmolive.........37%...........23%..........13%
Archer Daniels Mdlnd...67%...........53%..........14%
Time Warner.................91%...........71%..........21%
NewsCorp.....................78%...........54%..........24%
Visa..............................86%...........58%..........28%
Boeing..........................96%...........59%..........36%
Qualcomm....................43%.............5%..........38%
Texas Instruments........83%...........11%..........72%

And below here are the 27 third largest US Corps, with at least some international presence, which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Asset Mix.

....................................................................US
.................................................................Income
......................................US...........US...........vs
.....................................PTI.........Asset.......Asset
.....................................Mix..........Mix.......Spread

Dell..............................16%..........73%........(56)%
Qualcomm...................43%..........91%........(48)%
DuPont........................26%..........69%........(44)%
Hess............................(3)%..........39%........(42)%
Medtronic...................39%..........77%........(39)%
Caterpillar...................21%..........51%.........(31)%
BlackRock...................74%...........99%........(25)%
Prudential Financial....54%..........76%........(22)%
Bunge Ltd.....................1%...........17%........(16)%
Kraft Foods.................29%..........45%........(15)%
Gilead Sciences...........65%..........76%........(11)%
Corning......................25%..........35%........(10)%
Time Warner...............91%..........99%.........(8)%
Archer Daniels Mdlnd.67%..........75%.........(8)%
Boeing........................96%.........100%.........(4)%
Bank of NY Mellon......64%..........66%.........(2)%
Mosaic........................45%..........47%.........(2)%
Newmont Mining........18%..........20%.........(1)%
Colgate Palmolive.......37%..........33%...........4%
DirecTV......................80%..........75%..........5%
MetLife.......................81%..........75%..........6%
Visa............................86%..........79%..........7%
AFLAC........................22%..........13%..........9%
NewsCorp...................78%..........65%.........13%
Deere.........................68%...........54%.........14%
Devon Energy.............82%..........63%.........19%
Texas Instruments......83%..........46%.........37%

From a quick review of the above two charts, Texas has clearly the most patriotic and one of the two least patriotic of these third largest groups of Big Corps.

The patriotic poster child here is Texas Instruments, whose US Pretax Income Mix of 83% just blows away both its US Revenue Mix of 11% and its US Asset Mix of 46%.

On the other hand, Texas-based Dell's US Pretax Income Mix of only 16%, pales in comparison with both its US Revenue Mix of 52% and its US Asset Mix of 73%.

Four other Big Corps here come out as pretty patriotic: NewsCorp, Deere, Colgate Palmolive, and Boeing.

On the other hand, these above four are clearly more than trumped by six other Big Corps, which come out really poor in the patriotic score: Hess, DuPont, Medtronic, Caterpillar, Kraft Foods and Prudential Financial.

When I get some time, I will research similar information related to the many Big US Corps with Worldwide Pretax Income ranging from $2 bil to $3 bil in the most recent year. It should be interesting.

US 2nd Biggest Corps: Tax Loophole Perspectives

In my most recent post, I summarized key financial information related to the 24 largest US Corps, with Worldwide Pretax Income exceeding $10 bil each in the most recent year.

In this post, I will summarize similar key financial information related to the 30 second largest US Corps, with Worldwide Pretax Income between $5 bil and $10 bil each in the most recent year.

Here is the detailed information for these 30 second most profitable US Corps:

............................................................US........Effective
.........................................................Current........US
.........................................................Federal.... Federal
........................................................Income......Income
.........................................World.........Tax...........Tax
..........................................Wide.........Paid..........Rate
...........................................PTI........(Benefit)......Paid
........................................(mils of dollars)

Multinational Corps
Pfizer..............................9,422......(2,794)......(29.7)%
Coca Cola(1).....................9,265........... 470...........5.1%
Freeport-McMoran......8,512...........207...........2.4%
PepsiCo............................8,232............932.........11.3%
Cisco Systems..................7,825............914.........11.7%
Occidental Petroleum......7,359............614...........8.3%
Ford................................7,149............(69).........(1.0)%
McDonalds......................7,000.........1,127.........16.1%
United Technologies..6,538...........122...........1.9%
Eli Lilly.........................6,525...........376..........5.8%
Morgan Stanley...........6,202...........213...........3.4%
Bristol Myers Squibb.......6,071............797.........13.1%
3M..................................5,755............837.........14.5%
GM..................................5,737............(10)........(0.2)%
Abbott Labs(2)................5,713..........1,462.........25.6%
Amgen.............................5,317............636.........12.0%
Apache..........................5,206.............25...........0.5%
Schlumberger..............5,156..............76...........1.5%
Marathon Oil................5,122............183...........3.6%
Merck(3)..........................5,044............399...........7.9%
Total 20 Multinationals.133,150........6,517...........4.9%

Predominantly Domestic Corps
KKR LP (4).....................7,852..............51...........0.6%
United Health Group........7,383.........2,524.........34.2%
Disney.............................6,627..........1,530.........23.1%
Comcast..........................6,104..........1,502.........24.6%
American Express.....5,964.............532...........8.9%
Altria Group....................5,723..........1,430.........25.0%
CVS Caremark..................5,629..........1,894.........33.6%
United Parcel Service......5,523.............776.........14.1%
Home Depot....................5,273..........1,478.........28.0%
Dominion Resources.......5,037.............891.........17.7%
Total 10 Domestic Corps.61,115........12,608.........20.6%

Total all 30...................194,265........19,125...........9.8%

(1) Coca Cola PTI excludes fair value gain from remeasuring its Equity Investments.
(2) Abbott Labs US Federal Income Tax also includes US State and Possessions Income Tax.
(3) Merck PTI excludes In Process R&D Charge and Vioxx Liability Reserve Charge.
(4) KKR is a Partnership.

Clearly, there is something seriously wrong with US Tax Policy when the above 20 US Multinational Corps in total are paying an effective US Federal Income Tax Rate of only 4.9% in the most recent year. And this extremely low effective tax rate has been like this for the past decade. Principally, the US House Ways and Means Committee, but also the US Senate Finance Committee, have both really dropped the ball here.

And this 4.9% effective tax rate is overstated, since Abbott Labs above US Federal Income Tax also includes US State and Possessions Income Tax Paid. Further, Abbott Labs number also is unusually high in comparison with its previous years, probably because it is including something else in its current year amount, perhaps even the amount to cover future US income tax audits.

By far the best way to reduce the horrible unemployment and underemployment situation in the US is to simply close many of the massive tax loopholes of major US Corps, mostly the US Multinational ones, and use the proceeds to permanently and substantially reduce the US federal income tax rates paid by US small and medium-sized businesses.

The reason this wise action has not been done is that the Congressional Republicans are much more concerned about their large Corp constituencies, than they are about either their US small business or US citizen constituencies.

Below here shows the Income Tax paid by the 20 large US Multinational Corps to the US Government and to Foreign Governments in the most recent year.

...................................US...........................Foreign
.................................Current......Foreign...Current
...................................Fed..........Current.......Inc
...................................Inc.............Inc...........Tax
...................................Tax............Tax.........Paid
.................................Paid............Paid......(Benefit)
...............................(Benefit).....(Benefit).....Mix
.................................(mils of dollars)

Pfizer......................(2,794).........2,258........421%
Ford............................(69)............289........131%
GM..............................(10)............441........102%
Apache.........................25...........1,193.........98%
Marathon Oil...............183..........2,937.........94%
Freeport-McMoran.....207..........2,500.........92%
Schlumberger...............76..............909.........92%
United Technologies....122...........1,164.........91%
Morgan Stanley............213.............850.........80%
Merck..........................399...........1,446.........78%
Occidental Petroleum..614...........1,896.........76%
Coca Cola....................470...........1,212.........72%
Eli Lilly.......................376..............514..........58%
3M..............................837.............796..........49%
PepsiCo.......................932.............728..........44%
McDonalds...............1,127.............842..........43%
Cisco Systems.............914.............529..........37%
Abbott Labs.............1,462.............835..........36%
Bristol Myers Squibb..797.............339..........30%
Amgen........................636.............153..........19%

Total all 20...............6,517........21,831.........77%

I was really surprised to find in my most recent post that the 19 largest US Multinational Corps are paying in total 70% of their total income taxes to Foreign Governments.

But these 20 second largest US Multinational Corps are paying even more.....77%.....of their total income taxes to Foreign Governments.

And what in the world is going on with these above Big Oil Corps, paying almost nothing in income taxes to the US Government, but paying massive amounts of income taxes to Foreign Governments, as follows: Apache 98%, Marathon Oil 94%, Schlumberger 92%, and Occidental Petroleum 76%. And this was even a bit more than the nosebleed percentages paid to Foreign Governments by the Big 3 Oil Corps I disclosed in my most recent post: Exxon Mobil 94%, Chevron 87%, and ConocoPhillips 85%.

Clearly the US Big Oil Tax Loopholes must be closed. This is a clear injustice.....so many US citizens and US small businesses suffering so much, while US Big Oil continues to flourish, and live the good life, totally ignoring the very unfortunate situation of its fellow US citizens.

Yeah, these US Multinational Corps are doing much more to help balance the finances of Foreign Governments than they are of helping the severely depressed US Government finances, where their HQs are housed and where they are receiving so many benefits, including some very expensive ones like national security, infrastructure, and social security and medicare for their retirees.

Focusing now on which of these large US Multinational Corps are taking the most advantage of tax loopholes, which permits them to pay so little in US Federal Income Taxes, below are the 12 of them, whose US Federal Income Tax Paid Mix (i.e. US as a % of Worldwide) is substantially lower than their US Pretax Income Mix:

...................................US................................US
.................................Current..........................Tax
...................................Fed.............................Paid
...................................Inc............US...............vs
...................................Tax............PTI..........Income
...................................Mix...........Mix..........Spread

Pfizer.........................(521)%......(26)%........(495)%
Ford............................(31)%........61%..........(92)%
GM...............................(2)%.........46%..........(48)%
Morgan Stanley............20%.........57%..........(37)%
United Technologies.......9%.........41%...........(31)%
American Express.........51%.........82%..........(31)%
Apache...........................2%.........26%...........(23)%
Occidental Petroleum...24%.........44%...........(20)%
Freeport-McMoran........8%.........15%.............(8)%
Marathon Oil..................6%.........11%.............(5)%
Schlumberger.................8%.........12%.............(5)%
Eli Lilly (A)...................42%.........45%.............(3)%

Yeah, 4 of the above 12 are Big Oil Corps.

And below here are the 19 second largest US Multinational Corps which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Revenue Mix.

..................................................................US
...............................................................Income
....................................US...........US...........vs
...................................PTI...........Rev.........Rev
...................................Mix...........Mix......Spread

Marathon Oil................11%..........89%.......(78)%
Pfizer.........................(26)%..........43%.......(69)%
Abbott Labs.................(5)%..........43%.......(48)%
Amgen.........................42%..........77%.......(36)%
Cisco Systems..............16%..........50%.......(34)%
Occidental Petroleum..44%..........64%.......(20)%
United Technologies....41%..........53%.......(13)%
Freeport-McMoran......15%..........28%.......(13)%
Schlumberger...............12%..........24%.......(11)%
Morgan Stanley.............57%.........69%.......(11)%
Eli Lilly (A)...................45%..........56%.......(11)%
Apache.........................26%..........35%.......(10)%
GM...............................46%..........54%........(7)%
Coca Cola......................24%..........30%........(6)%
PepsiCo........................49%...........53%........(4)%
Bristol Myers Squibb.....63%..........65%........(2)%
McDonalds....................39%..........34%.........6%
Ford..............................61%..........49%........12%
3M................................48%..........35%........14%

Yeah, there are 5 Big Pharma Corps, with their income shifting to low foreign tax havens, including to Puerto Rico, in the above list. Also, there are 4 Big Oil Corps shifting income out of the US in the above list.

And below here are the 18 second largest US Multinational Corps which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Asset Mix.

..................................................................US
...............................................................Income
....................................US...........US...........vs
...................................PTI.........Asset.......Asset
...................................Mix..........Mix.......Spread

Pfizer........................(26)%.........57%........(83)%
Cisco Systems..............16%.........84%........(68)%
Abbott Labs................(5)%........45%........(50)%
Marathon Oil...............11%.........55%........(44)%
Occidental Petroleum..44%........78%........(34)%
Coca Cola....................24%.........56%........(32)%
Apache.......................26%.........50%........(24)%
Freeport-McMoran.....15%.........37%........(22)%
Amgen........................42%.........59%........(17)%
Morgan Stanley...........57%.........72%........(15)%
Eli Lilly (A)..................45%.........58%........(13)%
PepsiCo.......................49%.........59%........(10)%
United Technologies....41%.........48%.........(7)%
3M..............................48%.........53%.........(5)%
Bristol Myers Squibb...63%.........67%.........(4)%
GM..............................46%.........47%.........(1)%
McDonalds..................39%.........39%..........0%
Ford............................61%.........52%..........9%

(A) Eli Lilly includes its income from its operations in its Puerto Rico tax haven in with its US Pretax Income, thus its true US Pretax Income Mix is much lower than the above 45%.

From a quick review of the above two charts, the two clear patriotic US Multinational Corps are 3M, with US Pretax Income Mix of 48% and US Revenue Mix of a much lower 35%, and McDonald's, with US Pretax Income Mix of 39% and US Revenue Mix of a lower 34%. Also, both huge Auto Companies (Ford and GM) had favorable patriotic numbers.

On the other hand, many of these US Multinational Corps were the farthest thing away from being patriotic, as follows:

..BIG PHARMA
......Pfizer, with US Pretax Income Mix of a negative (26)%, Revenue from US Customer Mix of 43%, and US Asset Mix of 57%.
......Abbott Labs, with US Pretax Income Mix of a negative (5)%, Revenue from US Customer Mix of 43%, and US Asset Mix of 45%.
......Amgen, with US Pretax Income Mix of 42%, Revenue from US Customer Mix of 77%, and US Asset Mix of 59%.
......Eli Lilly, with US and Puerto Rico Combined Income Mix of 45%, Revenue from US Customer Mix of 56%, and US Asset Mix of 58%.

..BIG OIL
......Marathon Oil, with US Pretax Income Mix of only 11%, US Revenue Mix of 89%, and US Asset Mix of 55%.
......Occidental Petroleum, with US Pretax Income Mix of 44%, US Revenue Mix of 64%, and US Asset Mix of 78%
......Apache, with US Pretax Income Mix of 26%, US Revenue Mix of 35%, and US Asset Mix of 50%
......Schlumberger, with US Pretax Income Mix of 12%, and US Revenue Mix of 24%.

..BIG OTHER
......Cisco Systems, with US Pretax Income Mix of only 16%, and Revenues from US Customer Mix of a much higher 50%.
......Freeport-McMoran Copper and Gold, with US Pretax Income Mix of 15%, with Revenues from US Customer Mix of 28%, and US Asset Mix of 37%.
......United Technologies, with US Pretax Income Mix of 41%, and US Revenue Mix of 53%
......Morgan Stanley, with US Pretax Income Mix of 57%, and US Revenue Mix of 69%.

Given the above massive income shifts to minimize taxes, US Tax Policy must be changed to close these huge US Multinational Corp tax loopholes.

I think the optimal way to deal with all of the above tax unfairness, and at the same time, to permanently and substantially reduce US Federal Income Tax Rates for all business income (both to C Corps and to income from all pass thru entities), and to also reduce the US Deficit, is to close many of the tax loopholes of Big Corps, and to also institute a fair progressive minimum US Federal Income Tax on Worldwide Income.

With the resultant permanent, much lower US federal income tax rates on smaller businesses, I am pretty certain that a major dent in US unemployment and US underemployment will result.

When I get some time, I will research similar information related to Big US Corps with Worldwide Pretax Income ranging from $3 bil to $5 bil in the most recent year. It should be interesting.

US Biggest Corps: Tax Loophole Perspectives

I think it would be helpful to analyze the most recent key income tax footnote information related to the very largest US Corps, in order to get a better understanding of the extent of Corporate Tax Loopholes presently taken.

There were 24 US Corps which generated Consolidated Pretax Income (PTI) of more than $10 bil each in the most recent fiscal year through June 2011. The bulk of these had December 2010 year ends.

These 24 Biggest US Corps generated Total Worldwide Pretax Income of $449.3 bil in the most recent year, and a good estimate of their total US Federal Income Tax Paid was $32.3 bil, thus the estimated total effective US Federal Income Tax Paid was only 7.2%.

This US Federal Income Tax paid is the amount disclosed in their income tax footnotes as the Current Federal Income Tax Expense Paid or Payable related to the current year, and thus should be pretty close to the actual US Federal Income Tax paid in the most recent year.

Here is the detailed information for these 24 most profitable US Corps:

............................................................US........Effective
.........................................................Current........US
.........................................................Federal.... Federal
........................................................Income......Income
.........................................World.........Tax...........Tax
..........................................Wide.........Paid..........Rate
...........................................PTI........(Benefit)......Paid
........................................(mils of dollars)

Exxon Mobil...............52,959.......1,270.........2.4%
Chevron......................32,055........1,501.........4.7%
Microsoft.......................28,071........3,108........11.1%
JPMorganChase.............24,859........4,001........16.1%
Walmart.........................23,538........4,600........19.5%
ConocoPhillips..........19,750........1,312..........6.6%
IBM..............................19,723..........190..........1.0%
Berkshire Hathaway(1)...19,051........3,668........19.3%
Wells Fargo.................19,001........1,425.........7.5%
Apple............................18,540.........2,150........11.6%
ATT.............................18,238..........307..........1.7%
AIG...............................17,767.........(163).......(0.9)%
JNJ(2)...........................16,947........2,063........12.2%
Intel..............................16,045........4,059........25.3%
Procter&Gamble............15,189........1,809........11.9%
GE...............................14,208......(3,253)...(22.9)%
Citigroup....................13,184.........(249).......(1.9)%
Goldman Sachs.............12,892.........1,791.........13.9%
Verizon......................12,684........(705).......(5.6)%
Oracle............................11,411........1,817........15.9%
Bank of America(3)..11,077........(666)......(6.0)%
HP...............................10,974.........484..........4.4%
Google..........................10,796........1,657........15.3%
Phillip Morris............10,324..........157..........1.5%

Total all 24.................449,283......32,333..........7.2%

(1) Berkshire Hathaway above US Current Federal Income Tax Paid, and the related effective tax rate paid, are both overstated since they also include Foreign and State Income Tax Paid.
(2) JNJ above US Current Federal Income Tax Paid, and the related effective tax rate paid, are both overstated since they also include State Income Tax Paid.
(3) Bank of America above Worldwide Pretax Income excludes huge Goodwill Impairment Charge.

When you review the above 24 huge US Corps, there are several of them that have little in the way of foreign operations. Thus their Worldwide Income is generated substantially in the US. But yet, their US Federal Income Tax Paid is so meager.

The two of these mostly domestic large US Corps which really stick out are Verizon and ATT, and they had incredibly low effective US Federal Income tax rates paid.

I think there is something seriously wrong with US Tax Policy here. I would be interested in seeing how much tax benefit from 100% tax expensing they both received in 2010, along with the increased number of US full-time employees they had in 2010, while the 100% tax expensing was in effect.....after all, the whole idea behind 100% tax expensing is job creation, and these two giants are what Republicans continually say are the "Job Creators".

And then when I review Verizon's 10K SEC filing, I see that they had 222,900 employees at Dec 31, 2009. Thus if they are receiving all of these tax benefits from 100% tax expensing, then, in all fairness, they should have increased their number of employees dramatically in 2010.

So how many employees does their SEC filing say they have at Dec 31, 2010? Would you believe only 194,400, or a reduction of 28,500. Such is the recent employment hiring facts of our first "Job Creator".

Then, when I review ATT's 10K SEC filing, I see that they had 281,000 employees at Jan 31, 2010. So how many employees does their SEC filing say they have at Jan 31, 2011? Would you believe only 265,410, or a reduction of 15,590. So that's the employment hiring facts of our second "Job Creator".

I suggest we need a new head of the US House Ways and Means Committee, which is responsible for US tax legislation. US taxpayers are getting ripped off, and this has been happening since 2001.

Also, Wells Fargo is predominately a domestic company, but yet also has such a low effective US Federal Income Tax Rate Paid. When I review their Income Tax Rate Reconciliation, I do see so many large tax subsidies. I have to wonder just where are the benefits to the country of these large financial institutions receiving all of this tax largesse. So these large financial institutions cause the US financial meltdown, and the way the US Government penalizes them is by giving them all of these massive tax breaks? All of the Congressional Republicans, and frankly even some of the Congressional Democrats, are owned by US Big Corps.

Let me move to the US Multinational Corp giants included in the 23 largest US Corps.

Below here shows the Income Tax paid by the 20 giant US Corps, with a significant foreign presence, to the US Government and to Foreign Governments in the most recent year.

.............................US...........................Foreign
...........................Current......Foreign...Current
.............................Fed..........Current.......Inc
.............................Inc.............Inc...........Tax
.............................Tax............Tax.........Paid
............................Paid............Paid......(Benefit)
..........................(Benefit).....(Benefit).....Mix
...........................(mils of dollars)

GE.....................(3,253).........3,258....65,160%
Bank of America...(666)............815........547%
AIG......................(163)............807........125%
Citigroup..............(249).........3,239........108%
Exxon Mobil.......1,270........21,093.........94%
IBM.......................190..........3,127.........94%
Phillip Morris........157..........2,567.........94%
Chevron.............1,501.........10,483.........87%
ConocoPhillips....1,312..........7,469.........85%
HP.........................484..........1,345.........74%
JPMorganChase..4,001..........2,712.........40%
Procter&Gamble.1,809..........1,188.........40%
Goldman Sachs...1,791..........1,083.........38%
JNJ....................2,063..........1,194.........37%
Oracle................1,817..........1,037.........36%
Microsoft...........3,108..........1,602.........34%
Walmart............4,600..........1,466..........24%
Apple.................2,150............282..........12%
Google...............1,657............167............9%
Intel..................4,059............359............8%

Total all 20.......27,638.......65,293.........70%

When you look at the above list, yeah, Intel is clearly the patriotic US Big Multinational Corp "poster child". And Google and Apple aren't that bad at being patriotic either.

However, it just absolutely amazes me that these 20 largest US Multinational Corps are paying in total 70% of their total income taxes to Foreign Governments.....and yeah, that means that they are only paying 30% of their total income tax to the US Government.

And so many Americans call the US Multinational Corps patriotic? Give me a break. Most of them view themselves as Global Corps Period, not as American Corps Operating Globally. And they are doing much more to help balance the finances of Foreign Governments than they are of helping the severely depressed US Government finances, where their HQs are housed and where they are receiving so many benefits, including some very expensive ones like national security, infrastructure, and social security and medicare for their retirees.

And just think about some specific ones.

GE paid the same amount of money to Foreign Governments in total income taxes as they received from the US Government in income taxes. When I do the math, GE's numbers wash out, and effectively the US Government paid $3.3 bil in Foreign Aid in 2010 to these Foreign Governments related to GE.

And just look at the Big Oil Corps. Is this where we want to be as a country, where Exxon Mobil pays 94% of its Worldwide Income Taxes to Foreign Governments and only 6% of them to the US Government?

Why in the world are we giving Exxon Mobil all of these tax loopholes?

So the US Government pays twice and Foreign Governments are twice blessed as recipients. The US Government gives Exxon Mobil all of these massive tax loopholes and also pays for the national security of both Exxon Mobil employees and stockholders, as well as also paying for a good chunk of the national security of all of these foreign countries that are further blessed with the steep foreign income taxes that Exxon Mobil pays them.

And is this where we want to be as a country, where Chevron pays 87%, and ConocoPhillips 85%, of their Worldwide Income Taxes to Foreign Governments?

And IBM and Phillip Morris both paying 94%?

And both the US House Ways and Means Committee and the US Senate Finance Committee see nothing wrong with US Multinational Corps helping Foreign Government financial coffers substantially more than they are helping severely-stressed US Government financial coffers?.....and in fact, by their tax legislation, have consistently facilitated that result! And frankly, even the Joint Committee on Taxation Staff, and to a lesser extent, even the CBO, had to have played a role in leaving us in the horrible economic position we are faced with today, resulting from, in large part, off target, Big Corp-favored Tax Policy.

US Big Corps own all the Republicans members, and even some of the Democratic members, of the US House Ways and Means and US Senate Finance Committees. And the ones suffering from this Big Corp dominance are US small businesses and US citizens.

Focusing now on which of these large US Multinational Corps are taking the most advantage of tax loopholes, which permits them to pay so little in US Federal Income Taxes, below are the 8 of them, whose US Federal Income Tax Paid Mix (i.e. US as a % of Worldwide) is substantially lower than their US Pretax Income Mix:

...................................US..................................US
.................................Current............................Tax
...................................Fed...............................Paid
...................................Inc............US.................vs
...................................Tax............PTI............Income
...................................Mix...........Mix............Spread

GE........................(65,060)%........36%...........(65,096)%
AIG.............................(25)%........74%...............(99)%
IBM.................................6%........46%...............(41)%
ConocoPhillips...............15%........31%...............(17)%
HP.................................26%........37%...............(10)%
Exxon Mobil....................6%........15%................(9)%
Chevron.........................13%........20%................(8)%
JPMorganChase.............60%........67%................(7)%

Yeah, 3 of the above 8 are Big Oil Corps. And that horribly negative Percentage Spread has been like that for the entire past decade. If these 3 huge Big Oil Corps fairly paid US Federal Income Tax proportionate to the way they generated their US Income, the US Government's financial coffers would be substantially strengthened.

And there is something clearly wrong with US Tax Policy when a company like IBM can generate 46% of its Worldwide Income in the US, but yet only pay 6% of its Worldwide Federal Income Tax in the US.

And there is also something clearly wrong with US Tax Policy when a company like GE can generate 64% of its Worldwide Income overseas, and pay $3.3 bil in Foreign Income Taxes on this foreign income, and then generate 36% of its Worldwide Income in the US, and receive a US Federal Income Tax Refund of $3.3 bil on this US income. Just go figure!

And below here are the 18 large US Multinational Corps which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Revenue Mix.

............................................................US
.........................................................Income
..............................US...........US...........vs
.............................PTI...........Rev.........Rev
.............................Mix...........Mix......Spread

ConocoPhillips..31%..........66%........(34)%
Citigroup..............7%..........41%........(34)%
Microsoft...........32%..........54%........(23)%
Chevron.............20%.........42%........(22)%
Exxon Mobil......15%..........31%........(17)%
Apple....................30%..........44%........(14)%
JPMorganChase....67%..........78%........(12)%
GE.........................36%..........47%........(11)%
JNJ.......................38%..........48%........(10)%
Google..................46%..........48%.........(2)%
HP........................37%..........35%...........1%
Goldman Sachs.....57%..........55%...........2%
Walmart...............78%..........74%...........4%
IBM......................46%..........36%.........11%
Oracle...................56%..........43%.........13%
AIG......................74%..........53%.........21%
Procter&Gamble...59%..........37%.........22%
Intel.....................87%..........15%.........72%

And below here are the 16 large US Multinational Corps which disclosed financial information needed for me to compute both the US Pretax Income Mix as well as the US Asset Mix.

.............................................................US
...........................................................Income
................................US...........US...........vs
...............................PTI.........Asset.......Asset
...............................Mix..........Mix......Spread

Apple.....................30%..........86%........(56)%
Microsoft................32%..........86%........(55)%
Google....................46%..........86%........(40)%
Exxon Mobil...........15%..........43%.........(29)%
HP..........................37%..........55%........(18)%
ConocoPhillips........31%..........47%........(15)%
Chevron..................20%..........35%........(14)%
JNJ.........................38%..........51%........(13)%
Oracle.....................56%..........62%.........(6)%
JPMorganChase......67%..........71%.........(4)%
IBM........................46%..........49%.........(3)%
AIG........................74%..........67%...........7%
Procter&Gamble.....59%..........51%...........8%
GE...........................36%.........27%..........9%
Walmart..................78%.........68%.........10%
Intel........................87%.........71%.........16%

From a quick review of the above two charts, here are my observations:

***Intel making 15% of its sales to US customers, but yet having 71% of its Long-lived assets located in the US, a massive 87% of its Worldwide Income recognized in the US, and paying 92% of its Worldwide Federal Income Tax in the US is a flat-out fantastic result to all US constituencies.....US employees, US Government, all US citizens, and Intel.

***With Exxon Mobil having 43% of its Long-lived assets located in the US, and 31% of its Revenues in the US, but yet having only a paltry 15% of its Worldwide Profits in the US and also having only 6% of its Worldwide Federal Income Tax Paid in the US is patently unfair to the US Government, to US States, and to all US citizens, and thus US Tax Policy is clearly broken here and needs to be changed.

***With Chevron having 35% of its Long-lived assets located in the US, and 42% of its Revenues in the US, but yet having only a paltry 20% of its Worldwide Profits in the US and also having only 13% of its Worldwide Federal Income Tax Paid in the US is patently unfair to the US Government, to US States, and to all US citizens, and thus US Tax Policy is clearly broken here and needs to be changed.

***With ConocoPhillips having 47% of its Long-lived assets located in the US, and 66% of its Revenues in the US, but yet having a paltry 31% of its Worldwide Profits in the US and also having only 15% of its Worldwide Federal Income Tax Paid in the US is patently unfair to the US Government, to US States, and to all US citizens, and thus US Tax Policy is clearly broken here and needs to be changed.

***The Big Oil giant BP's amounts are not included in any of the above numbers, because BP is HQd in the UK, but I have to say that US Tax Policy is really off-target, and doesn't permit the US to collect its fair share of income taxes, when in 2009, BP's Non-Current Assets located in the US comprise a massive 41% of its Worldwide amounts, and BP's Total Revenues in 2009 in the US comprise 35% of its Worldwide Revenues, but yet BP's Total Replacement Cost Income Before Interest and Income Taxes in the US comprise a meager 12% of its Worldwide amount.

***The Big Oil giant Royal Dutch Shell's amounts are not included in any of the above numbers, because it is HQd in Europe, but there is something wrong with US Tax Policy, and it doesn't permit the US to collect its fair share of income taxes, when in 2010, Royal Dutch Shell Total Non-Current Assets located in the US comprise 22% of its Worldwide amounts, and its Total Revenues in 2010 in the US comprise 21% of its Worldwide Revenues, but yet its Pretax Earnings in the US from its massive Oil & Gas Exploration and Production Activities comprise a meager 7% of its Worldwide amount.

***It's just not fair for Microsoft to be able to recognize only 32% of its Worldwide Profits in the US, when 86% of its Worldwide long-lived assets are located in the US and 54% of its Revenues are made to US customers. US Tax Policy should be changed to fairly correct this.

***It's just not fair for JNJ to be able to recognize only 38% of its Worldwide Profits in the US, when 51% of its Worldwide long-lived assets are located in the US and 48% of its Revenues are made to US customers. US Tax Policy should be changed to fairly correct this.

***It's just not fair for Apple to be able to recognize only 30% of its gigantic Worldwide Profits in the US, when 86% of its Worldwide long-lived assets are located in the US and 44% of its Revenues are made to US customers. US Tax Policy should be changed to fairly correct this.

***It's just not fair for JPMorganChase to be able to recognize only 67% of its Gigantic Worldwide Profits in the US, and to pay only 60% of its Worldwide Federal Income Tax in the US, when 78% of its Revenues are in the US. US Tax Policy should be changed to fairly correct this.

***The Big Financial giant UBS's amounts are not included in any of the above numbers, because UBS is HQd in Switzerland, but I have to say that US Tax Policy is really off-target, and doesn't permit the US to collect its fair share of income taxes, when in 2010, UBS's Non-Current Assets located in the US comprise a massive 54% of its Worldwide amounts, but yet UBS's Operating Income in the US comprise a much lower 34% of its Worldwide amount.

I think the optimal way to deal with all of the above tax unfairness, and at the same time, to reduce US Federal Income Tax Rates for all business income, and to also reduce the US Deficit, is to institute a fair progressive minimum US Federal Income Tax on Worldwide Income.

When I get some time, I will research similar information related to Big US Corps with Worldwide Pretax Income ranging from $5 bil to $10 bil in the most recent year. It should be interesting.

US Congress Headed for a Single Digit Approval Rating

You would think that an approval rating of 12% would make the US Congress take notice and at least attempt to improve it by making the country better.

But not these Congressional Leaders, particularly the Republican Leadership in both the US House and in the US Senate. They have shown their whole-scale single allegiance to US Big Corps and to the Well to do.

But on both sides of the aisle, there is this widespread interest in self aggrandizement. And they just don’t get it…..how this narcicissism is really turning off US citizens, who just want the country to function effectively on a bipartisan basis in these incredibly trying times.

These members of Congress hold all of these hearings, but instead of listening to these experts, it seems that these Congressmen are primarily interested in showing to the public how much they know on the issue by dominating the hearing. And frankly, these Congressmen seem to frequently be so off target, as compared with the experts invited to give testimony.

And here’s the thing…..after all of these hearings, just what happens? Actually, nothing, from what I can gather. It just totally frustrates US citizens.

The US economy keeps getting worse, and how does the Congress act? The Republicans attack the Obama Administration, which is the only part of the US Government which is acting responsibly, and at least attempting to create US jobs.

No doubt the American Jobs Act has flaws. It is a 50mg prescription for the US economy, when a dose of 500mg is needed to prevent a second recession.

So how do the Republicans act? Instead of attempting to improve it, and work with the Obama Administration, they instead totally reject it.

More than any other reason, this is why the approval rating of the US Congress is headed for a historic low of under 10%.

But it’s more than just that.

The US House Energy and Commerce Committee is now actually proposing for the US Government to give additional tax breaks and subsidies to Big Oil. I’m not kidding. They now want to give massive tax subsidies to Big Oil for Natural Gas. And they think that US citizens think this is perfectly OK.

And the US House Ways and Means Committee, which is responsible for US Federal Income Tax legislation, refuses to deal with the fact that so many very profitable US Big Corps continue to pay no US Federal Income Tax. And they think US citizens don’t care about this.

And the Republican Head of the US Senate’s Budget Committee strongly feels that the high US unemployment rate is primarily due to the Budget Deficit. Alabama should consider recalling him for holding such an unintelligent position on such a critical issue to the country.

And while the US economy burns, the US Senate spends nearly all of its time debating whether the funding for the country’s recent natural disasters should be offset. Kentucky should recall both of its Senators, who are severely harming the US economy and US job creation. They are both an embarrassment to their State.

And it seems that every Republican in the US Congress sees nothing wrong with a millionaire paying a lower effective income tax rate than what a middle class working stiff pays. And they ignore the polls on this key issue of fairness, and widely proclaim that the American people have it wrong here.

When the country is going down the tubes economically mainly because of a totally ineffective US Congress, something needs to be done.

As one thought, I think that any time the approval rating of the Congress drops below 10%, that should automatically trigger a requirement that all of the Congressional Leaders in any party in either the US House or in the US Senate, that has an under 10% approval rating, should resign their leadership positions and give other Congressional members a chance to lead…..after all, it can’t possibly be any worse.

The only part of the US Government that is functioning properly is the Executive Branch.

But there is still something wrong with even parts of the Executive Branch.

How in the world is it right for the FBI, IRS, and US Immigration to take full-blown Gestapo actions against an IHOP restaurant in Evansville, Indiana just because the restaurant manager is Muslim and several of the workers are Latino?

My wife and I think the two best things in Evansville area are the new Fresh Market and the local IHOP.

These Government Suits need to be investigated for their clearly inappropriate actions here. Just what kind of country have we become, when Gestapo actions like these on so many innocent non-Caucasians has become so common place?

There needs to be consequences for clearly inappropriate actions taken in menacing raids on innocent citizens by US Government Suits. It almost seems like it is now a throwback to the McCarthy Era.

The Buffett Rule: Tax Policy Spot On.....Finally

The Obama Administration has just proposed that millionaires pay at least the same effective US federal income tax rate as middle income individuals pay.

Anybody in the US Congress who attempts to challenge that concept of tax fairness should be immediately removed from office as a US Senator or as a US House Member, due to clear incompetence.

But you know what, there is something even more unfair than what The Buffett Rule attempts to correct.

Let me focus on two key tax rate spreads.

The first one is the difference between what millionaire's pay in US federal income tax on their income and what middle income individuals pay. This is what The Buffett Rule focuses on.

The second one is the difference between what US Big Corporations pay in US federal income tax on their income and what Smaller and Medium-sized US Businesses pay on their income, both ones set up as corporations and in other forms, like sole proprietorships, partnerships, LLCs, etc.

The tax spread of the second one, which clearly both penalizes small and medium-sized US businesses, while at the same time, rewards large US Corps, especially Multinational Corps, is gargantuan as compared with the tax spread of the first one.

While closing both tax spreads is fair and noble, the key to also creating US jobs lies in not just closing, but also in reversing the direction of that huge very undesirable tax spread in the second one.

What is needed are true highly progressive US federal income tax rates on business income, that aren't just stair-step "sticker" increases, but reflect the economic reality of what effective tax rates are actually paid by businesses.

And what is also needed is a wisely designed and fair minimum tax on the worldwide income of large US Corps, which overdose on shifting income and US jobs overseas.

Congress Must Make American Jobs Act Better

There are some really good things in the Obama Administration’s American Jobs Act (AJA) proposal. But certainly the country can do much better than what’s here.

Instead of Republicans taking their normal stand of stopping-on-arrival anything that the Obama Administration proposes, I have a better idea.

It’s pretty clear to me that the Obama Adminstration’s economic and housing advisers have again shown here that they don’t have the level of business acumen and financial creativity necessary to solve the country’s pressing economic problems.

Thus, the Congress should immediately take charge, in a bipartisan way, and continue to work around the clock until the job is done, keeping the good parts in AJA that make sense, but vastly improve it.

If they can do this, their ratings will go up dramatically, but more importantly they can make very substantial dents in solving this horrible, ongoing, challenging US economic problem, where only the Big Corps and the Well-to-Do's continue to thrive, and the rest of the country keeps getting worse.

I am certainly not an expert, but let me offer some thoughts on just four of the key issues in AJA…..employee payroll tax cut, housing, 100% tax expensing, and infrastructure.

I think you have to start with the $447 bil total cost amount of AJA, and the breakdown of it to see if the money is being properly and effectively invested in the real problem, which is Job Creation. After all, it is entitled American "Jobs" Act.

First off, 39% of the $447 bil, or $175 bil, is for one item…..Cutting employee payroll taxes in half in 2012. What was Obama’s economic team thinking here?

Liberals rightfully point out the absurdity of conservative attempts at fixing the US economy by reducing the top corporate federal income tax rate, or by keeping the historically very low Bush top individual tax rates.

Such an indirect approach does nothing to create US jobs, and costs the US Government tons of money.

But cutting employee payroll taxes does precisely the same thing. It is also clearly an indirect approach, and does nothing to directly create US jobs, and costs the US Government tons of money.

Cutting the top corporate income tax rate, or keeping the Bush low top individual tax rates, is trickle down. Cutting employee payroll taxes is trickle up. They both are intellectually flawed.

The problem with abstract-thinking IVY League economists who dominate the thinking of the Obama Administration is that they look at everything macro, and just assume that just because money is inserted into the US economy, that will automatically create US jobs. That’s crazy reasoning.

Instead, the Obama Administration needs people advising him that have “business acumen”, who know that to create US jobs, you have to instead target it directly.

Giving a business a jobs tax credit for hiring a worker creates a job, as long as there is a requirement that this job must be retained for a reasonable period of time, or else the jobs tax credit is recaptured.

Just throwing money into the US economy by any kind of an untargeted tax cut, either given to corporations or to individuals, does not create jobs. With so many cold, calculating, greedy, financially-astute CEOs and CFOs now effectively running US Big Corps, much of this money thrown into the US economy ends up as additional profits of Big Corps.

When you think about it, this massive employee payroll tax cut giveaway is consistent with several very popular, but failed, initiatives tried in the first Economic Stimulus. Back then there were mass individual tax cuts for mainly the middle and lower classes, as well as another massive tax cut for the wealthy related to the Alternative Minimum Tax.

These very popular, but extremely expensive indirect tax cuts did nothing for job creation, since untargeted money was just thrown into the US economy.

If instead, that massive amount of money would have been used for wise job-creating initiatives like well designed, directly targeted Jobs Tax Credits and Investment Tax Credits for all businesses, I think we would presently be looking at a US unemployment rate below 7.5%, rather than at one above 9%. It would have been much more effective having the entire country working simultaneously on solving its deep recession, rather than leaving out the business community.

Further, liberals also point out the unfairness of Big Corps taking advantage of all of these corporate tax loopholes. Clearly, these need to be closed.

But what the Obama Administration’s economic team is proposing here with this $175 bil employee payroll tax cut is creating a new tax loophole for employees…..who are able to avoid paying 50% of their payroll taxes.

How in the world can you argue for closing Corporate Tax Loopholes out of one side of your mouth, and then simultaneously backdoor the creation of a new Individual Employee Payroll Tax Loophole out of the other side of your mouth?

And this AJA is not just extending the 2011 employee payroll tax cut Individual Tax Loophole, but it is expanding it in 2012.

And once this Individual Tax Loophole is there, it is very difficult to ever remove it…..just look how hard it is to get rid of Big Oil Subsidies, even though more than 80% of the country agrees they should be eliminated.

Since once enacted, this $175 bil Employee Payroll Tax Cut Subsidy will likely remain and continue to grow, the cost to the US Government over the next 10 years will be much more than $2 trillion. That pretty much wipes out the entire Debt Ceiling Deficit reduction over the same 10 years, that the US Congress recently passed.

So anyway, I think spending $175 bil, or 39% of your economic stimulus, on the employee payroll tax cut is clearly crazy economic policy. It makes the recipients happy, but it doesn't address the problem.....Job Creation.

If it is necessary to have an employee payroll tax cut, I would target it at the forgotten Underemployed, thus give it on only say the first $30,000 of wages in 2012. That is fair economic policy. These Underemployed did nothing to create the 2000s Lost Decade, but are suffering severely from it, and have been clearly forgotten by everyone.

But why throw the country’s money away on people already making a decent wage. They already have a good-paying job. Why reward them more, when the US Government already has a US Debt level of about $15 trillion?

Enough on the employee payroll tax cut.

Let me focus on some of the other 61% of the cost of AJA.

So many in the country, as well as the US economy as a whole, have suffered severely from underwater mortgages, and the Obama Administration housing advisers continue to offer nothing in the way of true solutions here. And neither has anyone in Congress, on either side of the aisle. It’s pretty clear the country needs a new housing advising team, with fresh ideas, as well as new ideas on this critical issue in the US Congress.

Since the Obama Administration’s housing advisers are not proposing wise effective initiatives that would make significant strides in solving the housing crisis, including what’s included in AJA, it behooves Congress, in a bipartisan manner, to take the ball here and put real effective housing initiatives in the AJA.

Maybe I missed something, but when I look at the details of the $447 bil on the last two pages of the AJA, I see no dollar cost amounts in there for solving the housing crisis. You’ve got to be kidding. The housing crisis is one of the major reasons for US unemployment and US underemployment, and there’s no money there to even try to fix it?

I suggest that wisely targeting money at the solving the housing crisis is much better use of the US government’s finances than an employee payroll tax cut giveaway.

Let me now address the key 100% tax expensing in the AJA.

At first thought, a simple mind would conclude that extending 100% expensing of all investments in new plants and equipment is a great idea, since it only costs $5 bil, or only 1% of the total $447 bil cost of AJA.

But why in the world do something that instead of creating jobs, actually reduces jobs? And the US Government is actually paying money to reduce jobs with this initiative.

Big Corps are major beneficiaries of 100% tax expensing. Their profits have been substantially enhanced by the higher sales resulting from it. And they also get this massive tax benefit from it, and are pretty much hiring no one. And many of them get 100% tax expensing and the increased sales from it, and at the same time, continue to lay off many of their employees.

No doubt that US Big Corps are chuckling at the 100% tax expensing in the AJA, which has no strings attached, just like they chuckled at a US Government that would give them the same incredible 100% tax expensing largesse, with no strings attached, in 2011. And so many in the country still wonder why Big Corp Profits are at record levels in both 2010 and 2011, but yet the US Deficit is so high in both 2010 and 2011, and also there has been so little US job creation in both 2010 and 2011?

There's a reason the US Congress has an approval rating of only 13%.....it's been earned.

When I look at the individual resumes of members on both sides of the aisle of the US Congress, I am really impressed. So what's the problem?

I think it is clearly a situation where the whole of the US House and the US Senate is substantially less than the sum of its parts. The whole is substantially below the sum of its parts because of the Congressional Leadership of the parties, particularly the Republican Leadership in both the House and the Senate.....it is bringing down their parties to the demise of the entire country.

The individual Republican Senators and Republican House members, for the most part, aren't permitted to think independently, and do what they think is right for the country. Instead, they are looked down on if they aren't in complete lockstep with the Republican Leadership.

That is why there is so much Party Line Voting, and so much of it is how US Big Corps direct them to vote. But yet the Congressional Republican Leadership always publicly declares that they are voting in line with the interests of Small Businesses, but that is not the case at all. Their policies are clearly designed to benefit Big Corps, and it has really worked. Small Busineses are still suffering.

At some point in time, the entire country is going to realize that, no matter what they say publicly, US Big Corps are only out for themselves. Because of this whole-scale self interest of US Big Corps, it should be the US Government's role to continually be intimately aware of this fact, and design policies that take that into account. That's obviously not happening.

A significant problem with job creation here from 100% tax expensing is that the bulk of these tax incentives are for technological efficiencies, where investments are made in equipment, with the ultimate result being that employees are replaced by machines.

And this $5 bil cost is really misleading. For full financial transparency, the US Government should broadly and clearly display what the cost to the US Government was in 2011, and will be in 2012, due to 100% tax expensing by all Corps, big and small.

It wouldn’t surprise me if this cost number to the US Government in just 2012 alone is much closer to $500 bil than to $5 bil. And the cost disclosed here should also compare 100% tax expensing in 2012 to present continuing first-year tax depreciation, before the 50% first-year bonus tax depreciation for 2012, which was temporarily enacted at the end of last year.

Given the dismal current US Government Debt level, can the country really afford a $300 bil to $500 bil addition to US Debt in 2012 for a 100% first-year expensing program that instead of creating US jobs, does just the opposite?

On the other hand, it is really not that difficult to convert 100% first-year tax expensing into a very effective US job creator. The Congress should take the initiative here, in a bipartisan way, and do this.

I'll make a prediction. If there was both sufficient financial creativity and business acumen placed on the 100% tax expensing intiative, there would be many more jobs created by it than by all of the other parts of the AJA combined.

How could that be possible?

You need to focus on accelerated tax depreciation incentives for all building investments, particularly on building remodelings, and not just on manufacturing buildings, but on all commercial buildings.

True Job Creation from 100% tax expensing doesn't come from equipment purchases, but rather from a massive number and a massive dollar amount of building improvements.

With massive commercial building improvements, you get construction jobs on the front end. And with the much improved buildings, you also get many subsequent jobs created from the upgraded building environment.

So how do you get 100% tax expensing on a building? Well, you don't...exactly.

Instead, you give the first ten years of present building tax depreciation all in the first year....still an incredible stimulation for investing in building remodelings.....and at little or no CBO scored cost to the US Government, since you also reduce the building tax basis, for subsequent building tax depreciation, by the amount of the first-year highly accelerated tax depreciation taken. Thus, you don't allow any building tax depreciation in Years 2 through 10. And as an additional tax incentive, you allow much faster tax depreciation than before on the years subsequent to the first 10 years.

And the thing that really makes this an explosive stimulus is when you combine it with the upcoming corporate and individual federal income tax reform, where the corporate federal income tax rate, as well as the effective individual tax federal income rate on non-corporate entities, are substantially reduced, particularly for smaller and medium-sized businesses.

Thus, a business making a building remodeling, as well as making equipment and software investments in 2011 and 2012, will be getting first-year very highly accelerated tax depreciation deducted at a 35% front-end tax rate, but yet the future earnings stream from these investments will be getting federal income taxed at a much lower tax rate under any reasonable corporate federal income tax reform.....This is explosive stimulation.....businesses will get it, since they have "business acumen".....the US Government suits haven't yet, and probably won't, unless perceptive Congresswomen can explain it to them.

And companies making substantial PPE investments in 2011 and 2012 will also be getting a substantial subsequent year GAAP reported earnings increase from the related Deferred Income Tax Liability write-down when corporate federal income tax reform is enacted, with the resultant lower tax rate. Again, businesses have the financial acumen to understand this.....US Government Suits don't.....US Congresswomen need to explain this to the Suits.

And because of the massive tax benefit US Big Corps will be receiving from 100% tax expensing, it is absolutely essential that they get these massive tax benefits only if they also add a sufficient number of new full-time employees, and retain them, on a total payroll count basis, for a reasonable period of time, or else these massive tax benefits are recaptured, and recaptured back at the 35% tax rate, rather than at the lower tax rate that will prevail after wise corporate federal income tax reform is enacted.

And if you wanted to make building remodelings, and the job creation flowing from it, even more explosive, and I clearly would, you could add in a wise additional energy tax credit for the portion of the building remodeling that the US Dept of Energy defines as clearly green. This wise addition would also permit the business to reduce its future energy costs for many years after the investment is made. And the additional continuing pretax income from these annual energy cost savings are income taxed at the substantially lower post corporate income tax reform income tax rates. Further, the added benefit of these green investments, made on a whole-scale basis by businesses throughout the country, is that it will permit the US to be closer to its critical long-term goal of being energy independent.

Given what's in the current AJA, it’s pretty clear that the Obama Administration has again been deceptively hustled by the Big Corps in their clearly self-interest, company-over-country 100% tax expensing, with no strings attached, desire. Big Corps want no government regulation over 100% tax expensing, even though it is disastrous to the country’s economic interests, and clearly shows that these Big Corps value their patriotism to their company over their patriotism to their country, even in these dismal US economic times.

The Obama Administration keeps emphasizing Country-over-Party, and this is indeed an excellent thought. However, I think the thought should be expanded to include Country-over-Big Corp Special Interest and to also include Country-over-Well-to-Do Special Interest.

Moving to another issue, frankly, in looking at the overall $447 bil price tag cost of AJA, I think this cost is much too low, when a country, and the world for that matter, is going through such disastrous economic times…..i.e. except for the Big Corps and the Well to Do.

And even though I think the $175 bil cost of the employee payroll tax cut should be substantially reduced, the $447 bil cost is still much too low.

So clearly there should be more money invested in directly targeted jobs tax credits and other tax incentives for smaller businesses, and for business start ups. What’s in the AJA is something designed by and written by IVY League abstract-thinking economists, just discussing with each other.

And I didn't see a dime of direct tax incentives in AJA for stimulating desperately needed R&D investments, which are clearly people intensive.

Congress should take the ball here, in a bipartisan way, and instead focus on what incentives potential entrepreneurs need to start and grow new businesses. This is where much of the job creation will come from......and get away from the Republican off-target, myopic, very time-consuming, and continually whining focus on government over-regulation.

And then there should be more money invested in making true dents in solving the housing crisis, with particular focus on writing down principals on underwater mortgages.

So what else is short in AJA that is truly needed to stimulate the US economy and create US jobs?

Clearly, it’s infrastructure spending. Much more is needed here. And it can be done more wisely, where the true economic cost to the country is substantially reduced.

The Congress should take the ball here, in a bipartisan way, and make the proper expansions of the infrastructure proposals now in the AJA.

Just as one thought, I think more money needs to be invested in things like building many massive, very secure Pipelines. And if designed wisely, in addition to the many new jobs created from building these Pipelines, this initiative should also reduce future energy costs. Further, the country's security will be enhanced. The money related to these US Government incentives shouldn’t go to the Big Oil Corps, but rather to smaller companies investing in building Pipelines.

And let me add one more thought.

When the US economy is this bad for everyone but Big Corps and the Well-to-Dos, the US Government needs an infusion of talent into the economic area.

When you look at the effectiveness of the entire US Government, the person whose performance clearly sticks out above all others is Hillary Clinton. She has made a monumental enhancement to US Government relations around the globe.

I think it would be wise to move her into the Economic Area, just for the successful completion of this critical AJA. Agile, highly successful US businesses do this kind of stuff all the time. And frankly, US economic security is so integral to successful foreign relations. She is not just incredibly talented as a leader, but she also is viewed very favorably by both sides of the aisle, and this is really needed to turn the AJA into something really special.

And spending a lot of time recently watching the many Deficit and Tax Discussions on C-Span and on the Internet, I make the following brief observations.

The Obama Administration should permanently place Edward Kleinbard at its Economic Table. What a brilliant mind on effective tax policy. Marty Feldstein also had some really good insights, but Kleinbard towered over everyone else with his broad knowledge and perceptive insights on these matters. USC is very lucky to have him.

The initial presentation by the Congressional "Supercommittee" on Deficit Reduction really disappointed me. If these are the best financial minds that the US Government has, then our economy will continue to be very troubled for a very long time.

I am sure they are well meaning heads of the US House Ways and Means and of the US Senate Finance Committees, but in these just horrible economic times, can the country afford to have Dave Camp and Max Baucus as heads of these two absolutely critical Congressional Committees? It's easy to see how US Big Corps have just run herd over these key Congressional Tax Committees.

It's also easy to see why the approval rating of the Republicans in the US House is so low. All three of them on this Supercommittee.....Jeb Hensarling, Fred Upton, and Dave Camp.....have such mediocre financial minds.

The one Supercommittee member who pleasantly surprised me was Republican Pat Toomey. I thought he had some good insights.

And lastly, I think it would be wise for some of the key CBO members to get some real-world business experience. Just being brilliant, and endlessly examining the data, isn't enough. No matter how intelligent you are, the data gets interpreted much better if you also have real-world business insight.

Maybe the US Government should fund some Executive MBA programs, or some short-term business internships, for some of these key CBO members, whose entire background is government and education.

Given the horrible US unemployment, US underemployment, the low median pay of those employed full time, the full-time employed being scared to death of losing their jobs, and the awful housing crisis, it would be really sad if, due to lack of proper business insight, the CBO is unrealistically too conservative in its scoring of a clearly fine job-creating, business incentive proposal.