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.
