One of the key provisions in President Obama’s Framework for Business Tax Reform is a Minimum Tax on Foreign Earnings.
What this accomplishes is to make it much less attractive for multinational corps to shift income, and the related jobs, overseas to foreign income tax havens.
Just how significant is the shifting of income overseas to foreign tax havens? It’s just huge. And it is done in a myriad of creative ways.
These self-serving people that keep pushing for a global territorial tax system are way off target.
A territorial system would result in even more gaming of income shifts from the US to foreign income tax havens, along with the loss of even more US jobs. What pure craziness.
This is why the 99%, and particularly the Occupy Movement, is so furious with a US Government which continually legislates for the 1%.
There is nothing more 1% than a global territorial tax system.
If a global territorial system of taxation were instituted, I think you would see a grass roots explosion like you have never seen before. These Occupy Movement people are very bright and you can't snow them.
In a recent post, I addressed the 61 most profitable US Big Corps with February 2011 through November 2011 fiscal year ends, which have filed their 2011 annual report 10-Ks with the SEC. I have included just those US Big Corps which have Worldwide Consolidated Pretax Income of more than $1 bil in either fiscal year ended 2011 or in 2010.
In this post, I am addressing the 181 most profitable Non-Utility US Big Corps with December 2011 year ends, which have filed their 2011 annual report 10-Ks with the SEC. Again, I have included just those US Big Corps which have Worldwide Consolidated Pretax Income of more than $1 bil in either 2011 or in 2010. As I uncover more of these companies, I will add them to this post.
Chubb and Ace were not included in the 181 companies below because they did not disclose any breakdown of their worldwide income between the US and foreign. MetLife and AFLAC are included below in the 181, but their income numbers disclosed are not their bottom line Pretax Income numbers, which weren't disclosed in their income tax footnotes, but whether Pretax Operating Income numbers disclosed in their Segment footnotes. Further, conglomerate Berkshire Hathaway, with substantial insurance operations, didn't disclose a breakdown between its US and foreign Pretax Income. As a whole, I find that the income tax footnotes of insurance companies just aren't financially transparent enough. The SEC clearly has the backs of the 1% Big Insurance Corps.
I also find that many companies in the financial industry are not very financially transparent in reporting their foreign income and/or related foreign income tax information in their income tax footnotes. Again, the SEC clearly has the backs of the 1% Big Financial Corps.
When all of the 10-K's are all filed with the SEC for companies with January 2012 fiscal year ends, I'll make an updated post to include the US Big Corps with these January 2012 fiscal year ends.
Below here is the percentage of Worldwide Pretax Income (PTI) which was generated overseas by these 181 US Big Corps. Some of these companies below, whose profit is predominantly earned in the US, did not disclose the precise amount of their Foreign Income, and thus I assumed below that all of their worldwide income was generated in the US.
...................................2011......2011..........2011.........2010
...................................Intl...Worldwide..Intl PTI....Intl PTI
...................................PTI.........PTI.........% Mix.......% Mix
…………………………..(millions of dollars)
Ally Financial..............852..........67.......1272%..........48%
Ingersoll-Rand plc....1,331........613.........217%.........104%
Noble Energy............1,252........715.........175%..........77%
MGM Resorts...........3,734.....2,832.........132%...........-4%
AES...........................2,693......2,179.........124%.........128%
Pfizer.......................15,016....12,762.........118%.........127%
Broadcom.................1,088........956.........114%..........79%
Marathon Oil............4,869.....4,427.........110%.........112%
Alcoa.........................1,161......1,063.........109%.........174%
Las Vegas Sands.......2,149......2,095.........103%.........112%
Southern Copper......3,450.....3,449.........100%.........100%
Phillip Morris..........12,532....12,532.........100%.........100%
Abbott Labs..............4,835......5,199...........93%.........105%
Hess..........................2,250......2,461..........91%.........103%
Marsh & McLennan.1,283.......1,404..........91%.........138%
Citigroup................13,100....14,624..........90%..........93%
Priceline.com...........1,223......1,368..........89%..........82%
Dow Chemical.........3,215......3,601..........89%.........129%
Honeywell................1,964......2,282..........86%..........57%
Baxter......................2,410......2,809..........86%..........90%
Exxon Mobil..........61,746....73,257..........84%..........85%
Yum Brands............1,393......1,659..........84%..........78%
AFLAC(1)................3,858......4,776..........81%..........78%
DuPont....................3,422......4,282..........80%..........74%
Chevron.................37,412....47,634..........79%..........80%
Aon..........................1,083......1,384...........78%..........98%
Freeport McMoran..6,706......8,818..........76%..........85%
Eli Lilly(2)...............4,066......5,350..........76%..........55%
Kraft Foods..............3,626......4,772..........76%..........71%
Eaton........................1,178......1,553..........76%..........89%
Coca Cola.................8,429....11,439..........74%..........49%
Murphy Oil...............1,110......1,551..........72%..........86%
Colgate Palmolive....2,691......3,789..........71%..........63%
Apache.....................5,720......8,093..........71%..........74%
Celgene....................1,003......1,420..........71%..........77%
JNJ..........................8,727.....12,361..........71%..........62%
Cognizant Tech Sols..825.......1,169..........71%..........75%
Corning...................2,241.......3,213.........70%..........75%
TRW Automotive......793.......1,148..........69%..........63%
Unum Group.............174.........257..........68%..........15%
Praxair.....................1,561......2,323..........67%..........67%
State Street Corp.....1,700......2,536..........67%..........64%
Cummins................1,790......2,671..........67%..........85%
Western Union...........851......1,275..........67%..........87%
Caterpillar...............4,475......6,725..........67%..........79%
Fluor...........................656......1,002..........65%..........19%
Prudential Fincl......3,324......5,117..........65%..........45%
Merck.....................4,708......7,334..........64%..........30%
Stryker....................1,073......1,686..........64%..........67%
Schlumberger.........4,013......6,338..........63%..........88%
Amgen....................2,600......4,150..........63%..........58%
Omnicom Group......968......1,549..........62%..........58%
Google....................7,633.....12,326..........62%..........54%
McDonalds.............4,809......8,012..........60%..........61%
Paccar.......................900......1,507..........60%..........72%
Diamond Offshore....693......1,179..........59%..........43%
3M...........................3,515......6,031..........58%..........52%
UnitedTechnol........4,312......7,605..........57%..........59%
NatlOilwellVarco...1,640......2,922..........56%..........70%
PPG Industries..........896......1,597..........56%..........61%
Occidental Petrol...6,035....10,841..........56%..........56%
Ebay.......................2,164......3,910..........55%..........60%
PepsiCo..................4,870......8,834..........55%..........51%
EMC.......................1,800......3,300..........55%..........46%
IBM......................11,287....21,003..........54%..........54%
Activision Blizzard....708......1,331..........53%..........54%
Danaher.................1,280......2,448..........52%..........55%
General Motors......3,102......5,985..........52%..........54%
Newmont Mining.....932......1,810..........51%..........82%
ConocoPhillips......11,784....23,001..........51%..........69%
St Jude Medical.........517......1,019..........51%..........54%
Zimmer Holdings......493........979..........50%..........56%
VF Corp.....................583......1,165..........50%..........44%
GE...........................9,854...20,098..........49%..........61%
Mastercard..............1,331......2,746..........48%..........20%
Allergan.....................610......1,300..........47%..........40%
Dover.........................513......1,095..........47%..........51%
Morgan Stanley......2,859......6,114..........47%..........42%
Illinois Tool Works..1,141......2,593..........44%..........42%
Xerox.........................648......1,565..........41%..........47%
Peabody Energy........558......1,374..........41%..........53%
Gilead Sciences.......1,480......3,651..........41%..........35%
Intl Paper...................584......1,458..........40%..........76%
Spectra Energy..........695......1,744..........40%..........40%
Kimberly Clark..........866......2,183..........40%..........37%
Texas Instruments..1,164......2,955..........39%..........17%
JPMorgan Chase..10,413....26,749..........39%..........33%
MetLife(1)..............3,245.......8,397..........39%..........16%
BristolMyersSquibb2,645......6,981..........38%..........37%
Baker Hughes............873......2,339..........37%..........58%
Yahoo........................294.........827..........36%..........19%
Bank of NY Mellon.1,281......3,617..........35%..........36%
Discovery Commun..548......1,559..........35%..........39%
Loews.........................760......2,232..........34%..........23%
Cliffs Natural Res......735......2,242..........33%..........54%
KLA Tencor...............358.......1,110..........32%..........58%
Amazon.com.............276........934..........30%..........41%
ThermoFisherScient..321......1,127..........28%..........34%
McGraw Hill.............362......1,347..........27%..........21%
Kellogg......................465......1,732..........27%..........27%
Ford........................2,138......8,181..........26%..........39%
LyondellBasell(3).....800......3,188..........25%
Goodrich...................278......1,165..........24%..........26%
DirecTV....................940......3,984..........24%..........20%
BlackRock................736......3,133..........23%..........26%
American Express.1,633......6,956..........23%..........20%
L-3 Communicatns.264......1,328..........20%..........15%
Devon Energy..........813......4,290..........19%..........18%
Biogen IDEC............302......1,711...........18%..........31%
Intel.......................3,122....17,781.........18%..........13%
Goldman Sachs.......995......6,169..........16%..........47%
Sandisk....................234......1,477..........16%..........13%
Cigna.......................295......1,968..........15%..........13%
Williams Cos............173......1,202..........14%..........37%
WW Grainger..........134......1,052..........13%...........6%
General Dynamics...473......3,718..........13%..........17%
Assured Guaranty....131......1,034..........13%...........7%
CBS...........................208......2,083..........10%..........12%
Halliburton..............409......4,449...........9%..........28%
Travelers..................122.......1,352...........9%...........2%
CNA Financial..........75..........877...........9%...........8%
WasteManagement.126......1,520...........8%...........7%
United Parcel Svcs..467......5,776...........8%..........13%
Kinder Morgan Inc...79......1,015...........8%..........16%
Verizon....................759....10,483...........7%...........6%
AmeripriseFinancial.97.......1,385...........7%..........10%
Comcast...................476......8,207...........6%...........0%
Boeing......................310......5,393...........6%...........4%
Valero Energy..........132......3,322...........4%...........4%
Raytheon...................86......2,690...........3%.........-11%
Northrop Grumman.85......3,083...........3%...........2%
Time Warner.............81......4,366...........2%...........9%
Reynolds American...29......2,186...........1%...........0%
CF Industries............25......2,646...........1%...........2%
Nucor........................10......1,252...........1%...........2%
Altria Group..............14......5,582...........0%...........0%
Berkshire Hathaway..0.....15,314...........0%...........0%
Wells Fargo................0.....23,656...........0%...........0%
ATT.............................0......6,716...........0%...........0%
UnitedHealthGroup..0......7,959...........0%...........0%
CVS Caremark..........0......5,746...........0%...........0%
Union Pacific..............0......5,264...........0%...........0%
WellPoint...................0......3,958...........0%...........0%
Capital One Fincl.......0......4,587...........0%...........0%
US Bancorp................0......6,629...........0%...........0%
PNC Financial Svcs...0......4,069...........0%...........0%
Lockheed Martin.......0......3,631...........0%...........0%
AXAEquitLifeInsUS..0......3,335...........0%...........0%
Chesapeake Energy...0......2,880...........0%...........0%
Aetna..........................0......3,078...........0%...........0%
CSX............................0......2,888...........0%...........0%
Norfolk Southern......0......2,918...........0%...........0%
HCA...........................0......3,561...........0%...........0%
Medco Health Sol.....0......2,376...........0%...........0%
HSBC USA................0........682...........0%...........0%
Time Warner Cable..0......2,462...........0%...........0%
PublixSuperMarkets.0......2,262...........0%...........0%
DISH Network.........0......2,411...........0%...........0%
Humana...................0......2,235...........0%...........0%
Lorillard...................0......1,770...........0%...........0%
Progressive Corp.....0......1,487...........0%...........0%
Liberty Media..........0......1,127...........0%...........0%
CenturyLink...........0........948...........0%...........0%
SLM.........................0........927...........0%...........0%
Lincoln National....0........599...........0%...........0%
Allstate....................0........960...........0%...........0%
Charles Schwab......0......1,392...........0%...........0%
M&T Bank..............0......1,225...........0%...........0%
T Rowe Price..........0......1,251...........0%...........0%
SouthwstrnEnergy.0......1,051...........0%...........0%
BB&T.....................0......1,628...........0%...........0%
FifthThirdBancorp.0......1,831...........0%...........0%
Key Corp...............0......1,345...........0%...........0%
HollyFrontier.........0......1,642...........0%...........0%
Express Scripts.....(2).....2,025...........0%...........0%
Quest Diagnostics.(2).......856...........0%...........0%
CME Group........(16).....1,937..........-1%..........-1%
Facebook...........(124).....1,695..........-7%..........-2%
EOG Resources.(246).....1,910........-13%.........-58%
El Paso Corp......(145).......377........-38%...........6%
HartfordFincl.....(236).......230......-103%.........10%
Total all 181...395,441..837,777.......47%.........45%
(1) MetLife and AFLAC PTI amounts are Pretax Operating Income.
(2) Eli Lilly Foreign Pretax Income excludes its significant operations in the Puerto Rico tax haven.
(3) LyondellBassell didn't disclose a useful Foreign Pretax Income or Loss number for 2010.
Of these 181 US Big Corps, 133 of them disclosed both significant amounts of Foreign Pretax Income (PTI) and their Foreign Income Tax Paid or Payable related to this Foreign Pretax Income in 2011. Colgate Palmolive isn't included below because it did not disclose its key Foreign Income Tax Paid number.
Below here is the Current Foreign Income Tax Paid or Payable in 2011 and the related Foreign Pretax Income in 2011 for these 133 US Big Corps. I have stratified them by Oil & Gas Corps and Non-Oil & Gas Corps in order to make more sense out of the data.
.......................................2011.......................2011........2010
.....................................Current....2011.....Foreign...Foreign
.....................................Foreign..Foreign..Effective..Effective
..................................Income Tax..PTI.....Tax Rate..Tax Rate
.................................(millions of dollars)
Non-Oil & Gas Corps
Hartford Financial Svcs...22........(236)........-9.3%......30.8%
Facebook...........................8........(124)........-6.5%......-5.3%
Assured Guaranty Ltd.......0..........131..........0.0%.......0.0%
MGM Resorts....................4.......3,734..........0.1%.......1.1%
Broadcom.......................23.......1,088..........2.1%.......2.4%
Gilead Sciences...............40.......1,480..........2.7%.......3.1%
Google..........................248.......7,633..........3.2%.......2.9%
Verizon...........................25..........759..........3.3%......-2.5%
Activision Blizzard..........28..........708..........4.0%......11.0%
Celgene...........................54.......1,003..........5.4%.......5.4%
EMC..............................101.......1,800..........5.6%......10.0%
Las Vegas Sands............121.......2,149..........5.6%.......0.5%
Ebay.............................122.......2,164..........5.6%.......7.4%
Amgen..........................148.......2,600..........5.7%.......4.9%
Western Union...............51..........851..........6.0%.......7.3%
Unum Group..................12..........174..........6.9%......26.2%
General Motors............275.......3,102..........8.9%......14.3%
KLA Tencor....................32..........358..........8.9%......17.8%
VF Corp..........................58..........583..........9.9%......16.0%
Peabody Energy.............59..........558.........10.6%......13.0%
Prudential Financial.....372.......3,324.........11.2%......17.6%
JPMorgan Chase.......1,183......10,413.........11.4%......32.7%
Baxter..........................274.......2,410.........11.4%......17.5%
Texas Instruments.......138.......1,164.........11.9%......11.8%
Intel.............................374.......3,122.........12.0%......16.9%
TRW Automotive...........97..........793.........12.2%......16.6%
St Jude Medical..............65..........517.........12.6%.......8.7%
Illinois Tool Works.......147.......1,141.........12.9%......30.5%
Corning........................289.......2,241.........12.9%.......7.6%
Johnson & Johnson..1,133.......8,727.........13.0%......11.3%
Ford.............................298.......2,138.........13.9%......11.3%
Biogen IDEC..................44..........302.........14.6%.......9.1%
Pfizer........................2,203......15,016.........14.7%......18.8%
Allergan.........................90..........610.........14.8%.....138.2%
Ingersoll-Rand plc......203.......1,331.........15.3%......11.0%
Zimmer Holdings..........76..........493.........15.4%......16.9%
Intl Paper......................91..........584.........15.6%......10.7%
Eaton...........................186.......1,178.........15.8%......11.6%
Xerox..........................103..........648.........15.9%......15.4%
Danaher......................206.......1,280.........16.1%.......7.3%
Bristol Myers Squibb...442.......2,645.........16.7%......15.1%
Coca Cola..................1,425.......8,429.........16.9%......17.3%
DuPont........................586.......3,422.........17.1%......16.4%
State Street Corp.........295.......1,700.........17.4%......11.6%
Loews(1).....................135..........760.........17.8%......35.9%
PepsiCo.......................882.......4,870.........18.1%......17.2%
Eli Lilly.......................760.......4,066.........18.7%......14.3%
LyondellBasell(2)........150..........800.........18.8%
Amazon.com................52..........276.........18.8%.......6.1%
Goodrich......................54..........278.........19.4%......17.4%
PPG Industries............176..........896.........19.6%......21.4%
Cigna.............................58..........295.........19.7%......18.5%
Morgan Stanley...........568.......2,859.........19.9%......32.1%
Discovery Commun....109..........548.........19.9%......17.2%
Aon..............................217.......1,083.........20.0%......19.5%
McDonalds..................982.......4,809.........20.4%......19.9%
Goldman Sachs..........204..........995.........20.5%......18.0%
Priceline......................252.......1,223.........20.6%......28.7%
Dover..........................107..........513.........20.9%......23.1%
Cognizant Tech Sols...174..........825.........21.1%......13.1%
Northrop Grumman.....18...........85.........21.2%......23.4%
Thermo Fisher Scient...69..........321.........21.5%......27.8%
Praxair........................341.......1,561.........21.8%......36.6%
Yahoo...........................66.........294.........22.4%......20.2%
Marsh & McLennan....289.......1,283.........22.5%......23.4%
Caterpillar...............1,014.......4,475.........22.7%......21.7%
Kellogg......................108..........465.........23.2%......27.4%
Ameriprise Financial....23............97.........23.7%......19.5%
Dow Chemical............768.......3,215.........23.9%......21.1%
Paccar.......................220..........900.........24.4%......26.2%
3M.............................861.......3,515.........24.5%......26.7%
Abbott Labs.............1,187.......4,835.........24.6%......13.9%
Bank of NY Mellon.....317.......1,281.........24.7%......30.7%
Omnicom Group........240..........968.........24.8%......30.0%
BlackRock..................186..........736.........25.3%......25.8%
American Express.....434.......1,633.........26.6%......42.8%
Citigroup................3,498......13,100.........26.7%......26.3%
Fluor........................176..........656.........26.8%......88.7%
Yum Brands..............374.......1,393.........26.8%......28.5%
Phillip Morris.........3,368......12,532.........26.9%......24.9%
L-3 Communications..71..........264.........26.9%......23.0%
DirecTV....................253..........940.........26.9%......32.2%
Mastercard................369.......1,331.........27.7%......53.8%
Waste Management....35..........126.........27.8%......19.3%
Travelers....................34..........122.........27.9%......73.6%
IBM.......................3,239......11,287.........28.7%......29.5%
Honeywell................564.......1,964.........28.7%......24.6%
FreeportMcMoran.1,948.......6,706.........29.0%......34.7%
Cummins..................524.......1,790.........29.3%......29.8%
CBS.............................61...........208.........29.3%......39.7%
Boeing........................93..........310.........30.0%......40.6%
McGraw Hill...............111..........362.........30.7%......46.4%
Kraft Foods..............1,113.......3,626.........30.7%......29.7%
General Dynamics......146..........473.........30.9%......23.1%
AES............................852.......2,693.........31.6%......28.3%
UnitedTechnologies.1,373.......4,312.........31.8%......30.0%
Comcast.....................153..........476.........32.1%
Cliffs Natural Res.......237..........735.........32.2%......23.7%
Merck......................1,568.......4,708.........33.3%.....289.8%
WW Grainger..............45..........134.........33.6%......40.4%
Stryker.......................372.......1,073.........34.7%......19.9%
UnitedParcelServices.166..........467.........35.5%......22.9%
Kimberly Clark...........311..........866.........35.9%......35.8%
Southern Copper.....1,239.......3,450.........35.9%......34.7%
Alcoa.........................427........1,161.........36.8%......43.0%
Ally Financial............353..........852.........41.4%......86.2%
Sandisk......................105..........234.........44.9%......21.7%
GE...........................4,657.......9,854.........47.3%......36.2%
Raytheon.....................46............86.........53.5%.....-14.6%
Newmont Mining....1,038..........932........111.4%......31.3%
CF Industries...............32............25........128.0%......81.8%
Time Warner..............364............81........449.4%....109.0%
Total 112 Non Oil&Gas
.....Corps...............52,087...244,232.......21.3%......22.7%
Oil & Gas Corps
Exxon Mobil........28,849......61,746.........46.7%......46.6%
Chevron...............16,548......37,412.........44.2%......41.1%
ConocoPhillips......7,095......11,784.........60.2%......55.2%
Occidental Petrol...2,357.......6,035.........39.1%......44.4%
Apache..................2,197.......5,720.........38.4%......30.8%
Marathon Oil.........3,088.......4,869.........63.4%......64.5%
Schlumberger..........693.......4,013.........17.3%......20.1%
Hess......................1,185.......2,250.........52.7%......44.3%
Natl Oilwell Varco....768.......1,640.........46.8%......26.8%
Noble Energy...........330.......1,252.........26.4%......26.1%
Murphy Oil..............497.......1,110.........44.8%......29.0%
Baker Hughes...........479.........873.........54.9%......63.1%
Devon Energy...........(20)........813.........-2.5%......41.0%
Spectra Energy.........100.........695.........14.4%.......6.3%
Diamond Offshore.....105.........693.........15.2%......35.0%
Halliburton...............334.........409.........81.7%......38.9%
Williams Companies....(6).........173.........-3.5%......20.1%
Valero Energy...........186.........132.......140.9%......35.5%
Kinder Morgan Inc........3..........79...........3.8%.......5.5%
El Paso Corp................(5).......(145)..........3.4%......14.9%
EOG Resources..........224........(246).......-91.1%.....-65.5%
Total 21 Oil&Gas
.....Corps..............65,007...141,307.......46.0%......44.6%
(1) Loews Foreign Income Tax includes both Current and Deferred Foreign Income Tax Expense.
(2) LyondellBassell didn't disclose a useful Foreign Pretax Income or Loss number for 2010.
When I look at the really high foreign income tax rates paid at the bottom of the above list for the US Big Oil and Gas Corps, frankly it makes absolutely no economic sense to me.
How could the Foreign Income Tax Rate Paid by the Big Oil and Gas Corps of 46.0% be more than double that paid by the Non Oil and Gas Corps of only 21.3%.
And just how could the Foreign Income Tax Rate Paid by the Big Oil and Gas Corps of 46.0% be so much higher than the US Statutory Federal Income Rate of 35%, when everyone knows that the US Statutory Federal Income Tax Rate of 35% is higher than that of any country in the world?
There is clearly some financial reporting subterfuge going on here by the Big Oil and Gas Corps. And just where is the SEC, which permits such blatant financial reporting subterfuge to occur?
I think what has to be ascertained is whether all of these massive amounts being reported by US Big Oil Corps in their income tax footnotes as foreign income taxes are indeed all truly foreign income taxes paid, and not either some other kind of foreign non-income taxes paid or some amounts paid to foreign governments which are not taxes at all.
For instance, US Big Oil companies which deceptively and inappropriately reclassify any portion of the massive amounts of royalties they pay to foreign governments for depleting the foreign government's natural resources as income taxes are engaging in a pure tax sham in order to inappropriately minimize the US Big Oil companies' worldwide income taxes, all to the clear detriment of US government coffers, and thus to the 99%.
The 99% have to be furious with this practice! And they also have to be furious with all the Republicans, and even some Democrats, in the US Congress who support this US Big Oil corporate tax sham. This is another of the many reasons the approval ratings of the US Congress are so low, and which are headed much lower.
And the 99% also has to be really disappointed with the SEC for not requiring US Big Oil Corps to be financially transparent in their reporting of foreign income taxes versus royalties. The SEC has consistently shown it has the backs of the 1%, in this case the 1% Big Oil Corps.
And the 99% also has to be really disappointed with the IRS for again working on behalf of the 1%, in this case the 1% US Big Oil Corps disguising royalties paid as foreign income taxes, instead of working on behalf of the 99%, including small businesses.
OK, now for the hard part. What kind of minimum tax on foreign earnings is fair?
Let me start off here with a very simple minimum tax on foreign earnings proposal, that minimizes the number of US global corps impacted and keeps the computation simple.
Annual Foreign Pretax Earnings....Minimum Tax Rate
1st $1 bil..................................................0.0%
next $1-$5 bil........................................20.0%
next $5-10 bil........................................22.5%
above $10 bil.........................................25.0%
I'll ignore the very large US Big Oil Corps, which should be impacted significantly by this minimum tax on foreign earnings, but which I cannot compute the additional minimum tax on since they do not disclose their true foreign income tax paid in their income tax footnotes.
For the rest of the global US giants, under the above simple minimum tax on foreign earnings scenario, only 20 of them would have paid additional US federal income tax on their 2011 Foreign Pretax Income (PTI). I excluded MGM Resorts because its Foreign Earning resulted from a large gain from the reorganization of its Chinese joint venture.
Here are the remaining 20:
..............................2011.......................2011.........2011......2011
...........................Current......2011.....Foreign......Total......Addtl
...........................Foreign....Foreign..Effective.Minimum...Tax
.......................Income Tax...PTI.....Tax Rate.......Tax.......Owed
...............................(A)..........................................(B).......(B)-(A)
.................................(mils of $s)............................(mils of $s)
Apple....................769.......24,000.......3.2%.......5,425.....4,656
Microsoft............1,602.......19,209.......8.3%.......4,227.....2,625
Google...................248.........7,633.......3.2%.......1,392......1,144
Pfizer..................2,203.......15,016......14.7%......3,179........976
JPMorgan Chase..1,183.......10,413......11.4%.......2,028........845
Cisco Systems........529.........6,611........8.0%.......1,162........633
JNJ.....................1,133.........8,727......13.0%......1,639........506
Carnival....................0..........1,912.......0.0%..........182........182
Amgen...................148.........2,600.......5.7%..........320........172
Qualcomm.............170.........2,703.......6.3%..........341........171
Coca Cola............1,425.........8,429......16.9%.......1,572........147
General Motors.....275.........3,102.......8.9%...........420........145
Ebay......................122.........2,164.......5.6%...........233........111
Las Vegas Sands.....121.........2,149.......5.6%...........230........109
Prudential Fincl....372.........3,324......11.2%...........465..........93
Medtronic.............189.........2,276.......8.3%...........255..........66
EMC......................101.........1,800.......5.6%...........160..........59
Gilead Sciences.......40.........1,480.......2.7%.............96..........56
Intel.....................374.........3,122......12.0%...........424..........50
Baxter..................274.........2,410......11.4%...........282............8
Total all 20......11,278.....129,080.......8.7%.......24,033...12,755
As you can see from the above list, clearly the US Big Multinational Corps with both the lowest effective foreign income tax rates and with the most shifting of income overseas are the ones negatively impacted, which is how it should be.
If you wanted to have a higher US Government tax revenue raising impact, as well as even a greater insourcing of jobs back to the US, then all you have to do is to lower the income exemption threshold amounts.
For instance, you could lower the foreign earnings exemption amount from the first $1 bil of Annual Foreign Earnings to say the first $500 mil. And perhaps a fair minimum tax rate on $500 mil to $1 mil of Foreign Pretax Income would be say 17.5%.
Here's another probably even fairer way to apply the minimum tax on foreign earnings.
Annual Foreign Pretax Earnings....Minimum Tax Rate
1st $500 mil...........................................0.0%
next $500 mil-$1 bil.............................15.0%
next $1-$5 bil.......................................17.5%
next $5-10 bil.......................................20.0%
next $10 bil-$20 bil...............................22.5%
above $20 bil........................................25.0%
Under the approach, there would be 31 companies that would have paid additional minimum US federal income tax on their 2011 Foreign Income. Here they are:
..............................2011.......................2011.........2011......2011
...........................Current......2011.....Foreign......Total......Addtl
...........................Foreign....Foreign..Effective..Minimum....Tax
.......................Income Tax...PTI.....Tax Rate.......Tax.......Owed
...............................(A)..........................................(B).......(B)-(A)
.................................(mils of $s)............................(mils of $s)
Apple....................769.......24,000.......3.2%.......5,025.....4,256
Microsoft............1,602.......19,209.......8.3%.......3,847.....2,245
Google...................248........7,633........3.2%.......1,302.....1,054
Pfizer..................2,203.......15,016......14.7%......2,904........701
JPMorgan Chase..1,183.......10,413......11.4%.......1,868........685
Cisco Systems.........529........6,611.......8.0%.......1,097........568
JNJ......................1,133........8,727.....13.0%.......1,520........387
Carnival.....................0........1,912.......0.0%...........235........235
Amgen...................148........2,600.......5.7%...........355........207
Qualcomm.............170........2,703.......6.3%...........373.......203
General Motors......275........3,102.......8.9%...........443........168
Ebay......................122.........2,164.......5.6%...........279........157
Las Vegas Sands.....121.........2,149.......5.6%...........276........155
Gilead Sciences........40........1,480.......2.7%...........159........119
EMC.......................101........1,800.......5.6%............215........114
Prudential Fincl.....372........3,324......11.2%...........482........110
Medtronic..............189........2,276.......8.3%...........298........109
Agilent Technolog....(6)..........944......-0.6%.............67.........73
Intel......................374........3,122......12.0%...........446.........72
Broadcom................23........1,088........2.1%.............90.........67
Devon Energy........(20)..........813.......-2.5%.............47.........67
Covidien Ltd..........187........1,917........9.8%...........235.........48
Baxter...................274........2,410......11.4%............322.........48
Tyco Intl...............229.........2,119......10.8%...........271.........42
Coca Cola............1,425........8,429......16.9%.........1,461.........36
Celgene....................54.......1,003........5.4%.............76..........22
Forest Labs..............57.......1,007.......5.7%.............76..........19
Verizon....................25..........759........3.3%.............39..........14
Western Digital.........12..........660........1.8%.............24..........12
Activision Blizzard...28..........708.......4.0%..............31............3
Corning..................289........2,241.....12.9%............292............3
Total all 31.........12,156....142,339.......8.5%.......24,154....11,998
And if you wanted more companies impacted here, you could lower the exempt annual foreign income threshold down to only $100 mil. And if you also think my earlier proposals are unduly too harsh for the few companies at the very top, you could soften that some.
Here's the resultant minimum tax on foreign earnings scenario.
Annual Foreign Pretax Earnings....Minimum Tax Rate
1st $100 mil...........................................0.0%
next $100 mil-$1 bil.............................15.0%
next $1-$10 bil.....................................17.5%
next $10-20 bil.....................................20.0%
next $20-30 bil.....................................22.5%
above $30 bil........................................25.0%
Under the approach, there would be 48 companies that would have paid additional minimum US federal income tax on their 2011 Foreign Income. Here they are:
..............................2011.......................2011.........2011......2011
...........................Current......2011.....Foreign......Total......Addtl
...........................Foreign....Foreign..Effective..Minimum....Tax
.......................Income Tax...PTI.....Tax Rate.......Tax.......Owed
...............................(A)..........................................(B).......(B)-(A)
.................................(mils of $s)............................(mils of $s)
Apple....................769......24,000.......3.2%......4,610.....3,841
Microsoft...........1,602.......19,209.......8.3%......3,552.....1,950
Google..................248........7,633.......3.2%.......1,296.....1,048
JPMorgan Chase.1,183.......10,413.....11.4%.......1,793.......610
Cisco Systems.......529.........6,611.......8.0%.......1,117.......588
Pfizer.................2,203.......15,016.....14.7%.......2,713.......510
JNJ....................1,133........8,727......13.0%.......1,487.......354
Carnival...................0........1,912........0.0%..........295.......295
Amgen..................148........2,600.......5.7%..........415.......267
Qualcomm............170........2,703.......6.3%..........433.......263
General Motors.....275........3,102.......8.9%..........503.......228
Ebay.....................122........2,164.......5.6%...........339.......217
Las Vegas Sands....121........2,149.......5.6%...........336.......215
Gilead Sciences.......40........1,480.......2.7%..........219.......179
EMC......................101........1,800.......5.6%..........275.......174
Prudential Fincl....372........3,324......11.2%..........542.......170
Medtronic.............189........2,276.......8.3%..........358.......169
AgilentTechnol.......(6)..........944......-0.6%..........127.......133
Intel.....................374........3,122......12.0%..........506.......132
Broadcom..............23........1,088.......2.1%...........150.......127
Devon Energy.......(20)..........813......-2.5%..........107.......127
Covidien Ltd.........187........1,917.......9.8%..........295.......108
Baxter..................274........2,410......11.4%..........382.......108
Tyco Intl..............229........2,119......10.8%..........331.......102
Celgene..................54........1,003.......5.4%..........136..........82
Forest Labs............57........1,007.......5.7%..........136.........79
Verizon..................25...........759.......3.3%............99.........74
Western Digital.......12...........660.......1.8%............84.........72
Activision Blizzard.28...........708.......4.0%............91.........63
Corning................289........2,241......12.9%.........352.........63
Western Union.......51...........851.......6.0%...........113.........62
Adobe Systems......42...........716.......5.9%............92.........50
Ford....................298........2,138......13.9%..........334.........36
Coach....................(3)..........317......-0.9%............33.........36
Seagate Technolgy.28...........479.......5.8%............57.........29
TexasInstrumnts.138........1,164......11.9%...........164.........26
Williams Cos..........(6)..........173......-3.5%............11..........17
Franklin Resrcs....123........1,028......12.0%..........140........17
VF Corp.................58...........583.......9.9%............72..........14
IllinoisToolWorks.147........1,141......12.9%..........160.........13
Coca Cola...........1,425........8,429......16.9%.......1,435.........10
Peabody Energy.....59...........558......10.6%............69.........10
TRW Automotive...97...........793......12.2%..........104...........7
KLA Tencor............32...........358.......8.9%............39...........7
Assured Guaranty....0...........131.......0.0%..............5...........5
McKesson...............54...........474......11.4%...........56...........2
TE Connectivity....197........1,361......14.5%..........198...........1
Cardinal Health.......17...........219.......7.8%............18...........1
Total all 48.......13,488....154,823.......7.8%....26,177....12,689
To be fair with companies negatively impacted, the best way to implement a minimum tax on foreign earnings system is to phase it in, thereby permitting the companies to take corrective action. Perhaps a phase in plan like this might make sense.....make it first effective after two years, and then in the third year, start staggering in the minimum tax rates and threshold amounts.
And the substantial money raised by the US Government for this wise minimum tax on foreign earnings initiative should all be used to substantially reduce the tax rates, both Corporate and Individual, on the lower amounts of business income. This is where the vast majority of the US job creation would come from.
Any member of the US Congress, Republican or Democrat, who either tries to stop or votes against this historically important to US job creation astute minimum tax on foreign earnings initiative should be targeted for defeat in the November 2012 election, if they are running, for conduct unpatriotically and monumentally detrimental to the country.
The US Congress has made a mockery out of the US Tax Code, all to the detriment of the 99%. When someone makes a mess, they should clean it up. That's not too much to ask. If they refuse to clean up their mess, they should be removed from office.
Much more to come!
