There were 10 US Big Telecommunication Corps with Pretax Income or Pretax Loss of at least $100 mil in either the 4Q 2011 or the 4Q 2010, and which have released their 4Q 2011 earnings so far.
These 10 US Big Telecommunication Corps generated a Total Pretax Income Decline of 11% in the most recent 4Q 2011.
Below here are these 4Q 2011 Pretax Earnings (PTI) or Pretax Loss (PTL), along with a comparison with the prior year’s quarter amounts.
.............................................................................Increase
.............................................PTI(L)....PTI(L).......(Decrease)
................................................4Q.........4Q..................
..............................................2011......2010....Amount....%
.................................................(millions of dollars)
Verizon(1)............................3,823.....3,970......(147)......-4%
AT&T(2)................................3,681.....4,068......(387)....-10%
Corning(3)...............................682........804......(122)....-15%
CenturyLink.............................192........359......(167)....-47%
American Tower......................160........137.........23......17%
MetroPCS(4)............................148.........121.........27......22%
NII Holdings..............................56........172......(116)....-67%
Avaya......................................(28)......(158)......130.....-82%
Clearwire Corp(5)...................(442)......(569)......127.....-22%
Sprint Nextel.......................(1,197)......(934).....(263).....28%
Total all 10...........................7,075.....7,970......(895)....-11%
(1) Verizon Communications PTI in both years exclude Special Severance, Pension and Benefit Charges.
(2) AT&T PTI in both years exclude Special Actuarial Losses or Gains on its Benefit Plans. Its 2011 PTI also excludes Termination Charge Related to the attempted T-Mobile Acquisition and Directory Asset Impairment Charge.
(3) Corning 2011 PTI excludes Asset Impairment Charge. Its 2010 PTI excludes Insurance Settlement Gain and Special Korean Tax Credit.
(4) MetroPCS 2010 PTI excludes Loss on Debt Extinguishment and Gain on Asset Disposition.
(5) Clearwire Corp PTL in both years exclude Loss on Asset Dispositions.
I think it would be smart for the US Government to give wise, measured incentives, both tax and non-tax, for companies like Verizon Communications and AT&T to break up into a handful of parts each. This not only would be very beneficial for the stockholders of both Verizon and AT&T, but it also would be great for US job creation, and also great to the US consumer. And it would make the businesses of both Verizon and AT&T so much more competitive.
And let me give you another of the many reasons that the US Congress has such an incredibly low favorable rating now, which is headed much lower.
Verizon is predominantly a US operating company. All of its numbers below are from its SEC filings.
There was no first-year US bonus tax depreciation for large corps in either 2006 or in 2007.
Verizon made total capital expenditures of $17.1 bil in 2006 and $17.5 bil in 2007.
In 2006, Verizon paid a very reasonable amount of US federal income tax of $2,364 mil on $7,000 mil of US Pretax Income, for an effective tax rate of 33.8%.....very fair to US taxpayers, and to the US Government.
In 2007, Verizon also paid a very reasonable amount of US federal income tax of $2,568 mil on $8,508 mil of US Pretax Income, for an effective tax rate of 30.2%.....again very fair to US taxpayers, and to the US Government.
In 2008, the US Congress enacted a 50% first-year bonus tax depreciation on large corps. Along with subsequent extensions, this 50% first-year bonus tax depreciation applied to all of 2008, 2009, 2010, 2011, and 2012. In late 2010, the US Congress stepped up this 50% first-year bonus tax depreciation to 100% for qualified capital expenditures from September 8, 2010 to December 31, 2011. After 2011, it drops back to 50% first-year bonus depreciation through December 31, 2012.
In 2008, Verizon made total capital expenditures of $17.2 bil, down from the $17.5 bil made in 2007.
In 2008, Verizon paid only $365 mil of US federal income tax on its $14,993 mil of US Pretax Income, for an effective tax rate of a meager 2.4%.....a complete rip off to US taxpayers, and to the US Government.
How many jobs did Verizon add in 2008 after taking advantage of this incredibly robust US tax incentive?
Well, from its SEC filings, instead of adding jobs, it slashed 11,100 jobs in 2008, thus reducing its number of employees from 235,000 at year end 2007 to 223,900 at year end 2008. Go figure!
In 2009, Verizon made total capital expenditures of $16.9 bil, down from the $17.2 bil made in 2008.
In 2009, instead of paying a dime, Verizon instead received $611 mil of US federal income tax refunds on its $12,625 mil of US Pretax Income, for an effective tax rate refund of a negative 4.8%.....a complete rip off to US taxpayers, and to the US Government.
How many jobs did Verizon add in 2009 after taking advantage of this incredibly robust US tax incentive?
Well, again from its SEC filings, instead of adding jobs, it slashed 1,000 jobs in 2009, thus reducing its number of employees from 223,900 at year end 2008 to 222,900 at year end 2009. Go figure again!
In 2010, Verizon made total capital expenditures of $16.5 bil, down from the $16.9 bil made in 2009.
In 2010, instead of paying a dime, Verizon instead received $705 mil of of US federal income tax refunds on its $11,921 mil of US Pretax Income, for an effective tax rate refund of a negative 5.9%.....a complete rip off to US taxpayers, and to the US Government.
How many jobs did Verizon add in 2010 after taking advantage of this incredibly robust US tax incentive, and some of it even a 100% first-year bonus tax depreciation?
Well, again from its SEC filings, instead of adding jobs, it slashed 28,500 jobs in 2010, thus reducing its number of employees from 222,900 at year end 2009 to 194,400 at year end 2010. Go figure again!
In 2011, Verizon made total capital expenditures of $16.2 bil, down from the $16.5 bil made in 2010.
In 2011, Verizon paid a very meager $193 mil on its $9,724 mil of US Pretax Income, for an effective tax rate of an extremely low 2.0%.....a complete rip off to US taxpayers, and to the US Government.
How many jobs did Verizon add in 2011 after taking advantage of this incredibly robust 100% first-year bonus tax depreciation for all of 2011?
Well, again from its SEC filings, instead of adding jobs, it slashed 500 jobs in 2011, thus reducing its number of employees from 194,400 at year end 2010 to 193,900 at year end 2011. Go figure again!
So let me put together the 4 years (2008 through 2011) of either 50% or 100% first-year bonus tax depreciation. In those 4 years combined, Verizon generated a massive $49.3 bil of US Pretax Income, while at the same time, instead of paying a dime of US federal income tax, received $758 mil in US federal income tax refunds. And also in those 4 years, Verizon shed a total of 41,100 jobs.
Where is the fairness here to the 99%?
But it's not just Verizon.
AT&T is also predominantly a US operating company. All of its numbers below are from its SEC filings.
For 2006 and 2007 combined, when US first-year bonus tax depreciation wasn't applicable, AT&T generated $29.1 bil of Consolidated Pretax Income and paid $9,247 mil of US federal income tax, for an effective tax rate of 31.8%.....clearly, very fair for the US taxpayers and for the US Government.
For 2008 and 2009 combined, when 50% bonus tax depreciation was effective in the US, AT&T generated $38.4 bil of Consolidated Pretax Income and paid $4,023 mil of US federal income tax, for an effective tax rate of only 10.5%, not as low as that of Verizon, but clearly a ripoff to the US taxpayer and to the US Government coffers. And how may jobs did AT&T add in those two years while it was receiving this massive tax largesse? Well, none, in fact it slashed 29,000 jobs, going from 310,000 at the end of 2007 to 281,000 at the end of 2009.
But it gets much worse for the 99% and the US Deficit in 2010 and 2011, much of which was when the 100% first-year bonus tax depreciation was in place.
For 2010 and 2011 combined, AT&T generated $25.0 bil of Consolidated Pretax Income and didn't pay a dime in total of US federal income tax, instead receiving a net total US federal income tax refund of $113 mil, clearly a massive ripoff to the US taxpayer and to the US Government coffers. And how may jobs did AT&T add in those two years while it was receiving this incredibly massive tax largesse? Well, none, in fact it slashed 25,000 jobs, going from 281,000 at the end of 2009 to 256,000 at the end of 2011.
When you put together these numbers for Verizon and AT&T, they are just massive......not just the incredibly high US federal income tax largesse received, but also the huge slashing of jobs. And that's just for 2 US Big Corps. You add all US Big Corps together, you can see why the US Deficit is so huge. And also why unemployment is also so high, since the vast majority of US Big Corps aren't hiring even though they received all of this tax largesse.
And what did the Republican controlled US House pass in late 2011? A no strings attached step up of first-year bonus tax depreciation in 2012 from 50% to 100%. I'm not kidding.
Thankfully, the Democratically-controlled US Senate at least had the sense to not pass this same step up.
And citizens wonder why the US Deficit is so huge?
And members of the US Congress wonder why the Occupy Movement is so incensed with their consistently unfair actions of legislating just on behalf of the 1% Big Corps?
And the Republicans in both the US Senate and the US House, and even some Democrats, expect US citizens to buy into a dramatic cut in Medicare, Medicaid, and Social Security Benefits in order to substantially reduce the US Deficit, when they have given, and continue to give, these massive no strings attached 50% and 100% first-year bonus tax depreciation breaks to the 1% Big Corps, which have not created US jobs?
The only way the country is going to be great again economically is for there to be a complete remake of the US Congress in the upcoming November 2012 election. The Obama Administration can't do it all by itself. It needs the US Congress to work with them.
