President Obama’s Framework for Business Tax Reform has as one of its main elements a reduction in the top Corporate Income Tax Rate from 35% to 28%, a huge chunk of which is paid for by a dramatic reduction in tax benefits from Accelerated Tax Depreciation.
To be fair to all businesses, it only makes sense that this huge tax rate reduction would also apply at the individual tax level for any business income of Sub S corps, partnerships, and Schedule C income passed through to any business owner.
I think this key aspect of the Framework for Business Tax Reform is what makes it so massively powerful for US job creation and US economic growth.
It is pretty clear that 50% and 100% first-year bonus tax depreciation have been great for US Big Corporation earnings, but have not in the aggregate added a dime of US job creation by these same US Big Corporations.
On the other hand, a substantial permanent business tax rate reduction, especially one targeted predominantly at the lower levels of business income, is a very powerful US job creator.
Also, I think that once bright people figure out the impact of this trade off of income tax rate reduction for accelerated tax depreciation, the stock market will move up dramatically, assuming the stock market makes the determination that this aspect of the Framework will pass in a reasonably short period of time.
Common stock prices are driven by earnings.
This Framework will result in a massive increase in earnings for companies with their operations predominantly in the US.
Whereas a permanent tax rate reduction directly increases corporate earnings, a killing of accelerated tax depreciation deductions does not reduce corporate earnings.
Also, companies with massive investments in property and equipment will obtain an additional upfront first-year huge pickup in earnings from bringing down the US Federal Income Tax Rate on the Cumulative Accelerated Tax Depreciation Deductions it has already taken the benefit of.
This additional earnings benefit results from the reduction of the US Deferred Income Tax Liability related to the difference in the Book and Tax Basis of Property and Equipment from one where the US Federal Rate is now set up at 35% to the new reduced rate of 28%.
Let me explain the impact of this trade off more specifically by taking you around the country to its effect on many businesses in many different industries.
The basic concept is that everything else being equal, the market price of the common stock of the company operating only in the US should increase by the continuing annual percentage increase in earnings, caused by this switch from Accelerated Tax Depreciation Benefits to a 7% income tax rate reduction.
For pure domestic companies, and just looking at this trade off, the continuing annual earnings increase should be mostly about 11%.
I'll start out in this Part One with large companies in the US Southeast, where the football is great, but the financial expertise of those serving in Leadership Positions in the US Congress, not so great.
As an introduction here, let me first show the Corps in Southeast US States with Worldwide Pretax Income above $1 bil in the most recent year 2011, and which also have a majority of their worldwide income earned overseas, along with what percentage of this income was earned in Foreign Countries.
……………..……............Worldwide
……………….…….............Pretax……….Foreign
………………….…............Income………Income
……..………….........(mils of dollars)…….Mix
Coca-Cola…GA…….......11,439……….…74%
AFLAC...GA………….......2,992………….81%*
AES Corp…VA…............2,179………...124%
Carnival…FL…..............1,912……...…100%
Yum Brands…KY………..1,659…………..84%
* AFLAC % is based on Pretax Operating Income Mix.
As you can see from so few of them shown above, the US Southeast is not exactly a haven for Giant US Global powerhouses.
Frankly, there is something seriously wrong with US Tax Policy when AES Corp generates US Pretax Losses of $514 mil in 2011, $527 mil in 2010, and $1,028 mil in 2009, while at the same time, generating huge amounts of Foreign Pretax Income of $2,693 mil in 2011, $2,392 mil in 2010, and $3,296 mil in 2009.
And then at the same time, AES Corp's US Property, Plant and Equipment (PPE) comprised 33% of its Worldwide PPE. Go figure!
And then there is also something wrong with US Tax Policy when Cruise Giant Carnival does not pay a dime of US Federal Income Tax, or any foreign income tax either, for that matter. It might be great for Lebron James and Dwayne Wade, but it's not so great for the vast majority of US citizens.
These highly unusual situations tell you why the President’s Framework for Business Tax Reform is so important to prevent these clearly unfair situations to the 99% of the country from continuing to happen.
And it also tells you why the majority of the US Congress, which supports such US Big Corp favored tax breaks, has such a low approval rating, which is headed much lower.
President Obama’s Framework for Business Tax Reform has some incredibly powerful incentives to entice the above companies and many others to insource back to the US a huge chunk of these massive foreign earnings as well as the related jobs.
First, these foreign earnings shifted back to the US will be granted a 7% US federal income tax rate deduction.
Second, these foreign earnings shifted back to the US will be able to avoid a US federal minimum income tax on their foreign earnings. This provision is particularly focused in a fair manner at companies which overdose in shifting US income and the related US jobs overseas.
And third, there’s a special tax break for the costs of companies moving their operations back to the US.
Now, I’ll focus below on specific large companies with US Pretax Income in the most recent year above $500 mil, and which also have the majority of their consolidated earnings generated in the US. I am also including some companies not making the US Pretax Earnings threshold but with a very large net Deferred Income Tax Liability position at the end of the most recent year.
FLORIDA
Publix Super Markets
The very well run, employee-owned, Lakeland, FL-based Grocery Retailer Publix Super Markets, which just operates in the US, generated Pretax Income of $2,262 mil in 2011. Its Total Income Tax Expense was $770 mil, for an effective income tax rate of 34%. And thus its After-tax Net Income in 2011 was $1,492 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Publix would have reduced its income tax expense in 2011 by roughly 7% X $2,262 mil, or by $158 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $158 mil divided by $1,492 mil.
In addition, Publix had a net Deferred Income Tax Liability of $258 mil at the end of 2011, caused by its heavy investment in Property and Equipment. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $52 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $52 mil in 2011.
Therefore in total, the After-tax Net Income of Publix Super Markets would have increased by $210 mil in 2011 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Publix, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move more of Publix's many part-time workers to full-time status, to elevate the wages of its workers to a much more livable status, to hire additional full-time workers, and to also reduce the grocery prices it charges to its customers.
After all, we're all in this together. Legislation should benefit the 100%, not just the 1%.
Nextera Energy
Juno Beach, FL-based Utility Corp Nextera Energy, which operates just in the US, generated Pretax Income of $2,452 mil in 2011. Its Total Income Tax Expense was $529 mil, for an effective income tax rate of only 21.6%, dropped down by substantial tax credits. And thus its After-tax Net Income in 2011 was $1,923 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, NextEra Energy would have reduced its income tax expense in 2011 by roughly 7% X $2,452 mil, or by $172 mil. And thus, its 2011 After-tax Net Income would have increased by 9%, or by $172 mil divided by $1,923 mil.
In addition, NextEra Energy had a net Deferred Income Tax Liability of a gigantic $5,565 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,113 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of a monstrous $1,113 mil in 2011.
Therefore in total, the After-tax Net Income of NextEra Energy would have increased by $1,285 mil in 2011, yeah that's nearly $1.3 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of NextEra Energy, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce substantially the utility costs NextEra Energy charges its many customers.
CSX
The very well run, Jacksonville, FL-based CSX Corp, which operates just in the US, generated Pretax Income of $2,888 mil in 2011. Its Total Income Tax Expense was $1,066 mil, for an effective income tax rate of 36.9%. And thus its After-tax Net Income in 2011 was $1,822 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, CSX would have reduced its income tax expense in 2011 by roughly 7% X $2,888 mil, or by $202 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $202 mil divided by $1,822 mil.
In addition, CSX had a net Deferred Income Tax Liability of a gigantic $7,419 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all railroad corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,484 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of a monstrous $1,484 mil in 2011.
Therefore in total, the After-tax Net Income of CSX would have increased by $1,686 mil in 2011, yeah that's nearly $1.7 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of CSX, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the transportation costs CSX charges all of its customers, particularly its small business customers. And some of these additional CSX earnings should also be used by CSX doing its part in helping solve the country's long-term energy problem by making wise, measured, patriotic investments in things like mass transit.
Harris Corp
Fidelity National Information Services
Darden Restaurants
GEORGIA
Home Depot
The well run, Atlanta, GA-based Retailer Home Depot, which generated 92% of its worldwide income in the US in the fiscal year ended (FYE) Jan 2011, generated Worldwide Pretax Income of a gigantic $6,068 mil in FYE Jan 2012. Its Total Income Tax Expense in FYE 2012 was $2,185 mil, for an effective income tax rate of 36%. And thus its After-tax Net Income in FYE 2012 was $3,883 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of FYE 2012, Home Depot would have reduced its income tax expense in FYE 2012 by roughly $391 mil, or by 7% X $5,583 mil (assuming the same 92% US income mix). And thus, its 2012 After-tax Net Income would have increased by 10%, or by $391 mil divided by $3,883 mil. And its Equivalent Pretax Income in FYE 2012 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Home Depot, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move more of Home Depot's many part-time workers to full-time status, to elevate the wages of its workers to a much more livable status, and to hire additional full-time workers.
United Parcel Service
The extremely well run, Atlanta, GA-based United Parcel Service (UPS) Corp, generated $5,309 mil, or 92% of its $5,776 mil worldwide income in the US in 2011. Its Total Income Tax Expense was $1,972 mil, for an effective income tax rate of 34.1%. And thus its After-tax Net Income in 2011 was $3,804 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, UPS would have reduced its income tax expense in 2011 by roughly 7% X $5,309 mil, or by $372 mil. And thus, its 2011 After-tax Net Income would have increased by 10%, or by $372 mil divided by $3,804 mil.
In addition, UPS had a net Deferred Income Tax Liability of $1,202 mil at the end of 2011, caused by its heavy investment in Property and Equipment. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $240 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $240 mil in 2011.
Therefore in total, the After-tax Net Income of UPS would have increased by $612 mil in 2011 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of UPS, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to hire more full-time workers, and to also reduce the transportation costs UPS charges all of its customers, particularly its small business customers. And some of these additional UPS earnings should also be used by UPS doing its part in helping solve the country's long-term energy problem by making wise, measured, investments in making its transportation fleet even more energy efficient.
Southern Co
Atlanta, GA, FL-based Utility Corp Southern Co, which operates just in the US, generated Pretax Income of $3,487 mil in 2011. Its Total Income Tax Expense was $1,219 mil, for an effective income tax rate of 35%. And thus its After-tax Net Income in 2011 was $2,268 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Southern Co would have reduced its income tax expense in 2011 by roughly 7% X $3,487 mil, or by $244 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $244 mil divided by $2,268 mil.
In addition, Southern Co had a net Deferred Income Tax Liability of a gigantic $8,654 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,731 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of a monstrous $1,731 mil in 2011.
Therefore in total, the After-tax Net Income of Southern Co would have increased by $1,955 mil in 2011, yeah that's nearly $2.0 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Southern Co, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to substantially reduce the utility costs Southern Co charges its many customers.
Genuine Parts
AGL Resources
Delta Air Lines
TENNESSEE
HCA
The Nashville, TN-based Hospital Corp HCA generated Pretax income for 2011 of $3,561 mil. However, included in this Pretax Income was a nontaxable Gain on Acquisition of a Controlling Interest in its Equity Investment of a huge $1,522 mil. Exclusive of this huge nontaxable gain, HCA's Core Pretax Income in 2011 was $2,039 mil. Its Income Tax Expense in 2011 was $719 mil, for an effective income tax rate of 35% on its Core Pretax Income. And thus its Core After-tax Net Income in 2011 was $1,320 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, HCA would have reduced its income tax expense in 2011 by $143 mil, or by 7% X $2,039. And thus, its 2011 After-tax Core Net Income would have increased by 11%, or by $143 mil divided by $1,320 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of HCA, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move some of HCA's many temporary and part-time workers to full-time status. Also, it is only fair that some of these additional earnings be used to reduce patient service fees.
FedEx
The extremely well run, Memphis, TN-based FedEx Corp, generated $1,793 mil, or 79% of its $2,265 mil worldwide income in the US in its fiscal year ended May 2011. Its Total Income Tax Expense was $813 mil, for an effective income tax rate of 36%. And thus its After-tax Net Income in 2011 was $1,452 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, FedEx would have reduced its income tax expense in 2011 by roughly 7% X $1,793 mil, or by $126 mil. And thus, its 2011 After-tax Net Income would have increased by 9%, or by $126 mil divided by $1,452 mil.
In addition, FedEx had a net Deferred Income Tax Liability of $726 mil at the end of 2011, caused by its heavy investment in Property and Equipment. Let's assume that the US portion of this net Deferred Income Tax Liability is the same 79% as that represented by its US profit mix. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $115 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $115 mil in 2011.
Therefore in total, the After-tax Net Income of Fedex would have increased by $241 mil in 2011 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of FedEx, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move many of its Courier Drivers from independent contractor status to full-time employee status, and also to reduce the transportation costs FedEx charges all of its customers, particularly its small business customers. And some of these additional Fedex earnings should also be used by FedEx doing its part in helping solve the country's long-term energy problem by making wise, measured, investments in making its transportation fleet even more energy efficient.
Autozone
The very well run, Memphis, TN-based Retailer Autozone, which just operates in the US, generated Pretax Income of $1,324 mil in 2011. Its Total Income Tax Expense was $475 mil, for an effective income tax rate of 36%. And thus its After-tax Net Income in 2011 was $849 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Autozone would have reduced its income tax expense in 2011 by roughly 7% X $1,324 mil, or by $93 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $93 mil divided by $849 mil.
In addition, Autozone had a net Deferred Income Tax Liability of $156 mil at the end of 2011, caused mainly, and frankly strangely so, by its Inventory. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $31 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $31 mil in 2011.
Therefore in total, the After-tax Net Income of Autozone would have increased by $124 mil in 2011 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Autozone, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move more of Autozone's many part-time workers to full-time status, to elevate the wages of its workers to a much more livable status, and to hire additional full-time workers.
Dollar General
The well run, Goodlettsville, TN-based Retailer Dollar General, which just operates in the US, generated Pretax Income of $985 mil in its fiscal year ended (FYE) Jan 2011. Its Total Income Tax Expense for FYE 2011 was $357 mil, for an effective income tax rate of 36%. And thus its After-tax Net Income in FYE 2011 was $628 mil.
Dollar General won't be releasing its FYE Jan 2012 earnings until March 22, 2012. For the 9 months ended Oct 2012, its Pretax Earnings are up 18%. Thus, let me project its FYE Jan 2012 earnings assuming this 18% growth. Under such an assumption, its FYE 2012 Pretax Income would be $1,162 mil, its FYE 2012 Income Tax Expense would be $421 mil, and its FYE 2012 After-tax Net Income would be $741 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2012, Dollar General would have reduced its income tax expense in 2012 by roughly 7% X $1,162 mil, or by $81 mil. And thus, its 2012 After-tax Net Income would have increased by 11%, or by $81 mil divided by $741 mil.
In addition, Dollar General had a net Deferred Income Tax Liability, exclusive of that related to its Trademarks, of $199 mil at the end of 2011. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $40 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $40 mil in 2011.
Therefore in total, the After-tax Net Income of Dollar General would have increased by roughly $121 mil in 2012 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2012 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Dollar General, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move more of Dollar General's many part-time workers to full-time status, to elevate the wages of its workers to a much more livable status, and to hire additional full-time workers. In addition, it is only fair that Dollar General share some of this tax largesse with its customers, many of whom are under severe financial distress.
International Paper
Eastman Chemical
ALABAMA
Energen
Birmingham, AL-based Oil & Gas Corp Energen Corp, which operates just in the US, generated Pretax Income of $405 mil in 2011. Its Total Income Tax Expense was $145 mil, for an effective income tax rate of 36%. And thus its After-tax Net Income in 2011 was $260 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Energen would have reduced its income tax expense in 2011 by 7% X $405 mil, or by $28 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $28 mil divided by $260 mil.
In addition, Energen Co had a net Deferred Income Tax Liability of $757 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $151 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $151 mil in 2011.
Therefore in total, the After-tax Net Income of Energen would have increased by $179 mil in 2011, by this key trade off included in the Obama Admin For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Energen, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the fees Energen charges its customers.
Protective Life
LOUISIANA
Entergy
New Orleans, LA-based Utility Corp Entergy Corp, which operates just in the US, and not just in Louisiana, but also in Mississippi, Arkansas, and Texas, generated Pretax Income of $1,653 mil in 2011. Its Total Income Tax Expense was only $286 mil, but included a $422 mil tax benefit for a Deferred Income Tax Reversal on a PPA Settlement. Thus, exclusive of the latter, a more normalized Income Tax Expense in 2011 was $708 mil. And thus a more normalized After-tax Net Income in 2011 was $945 mil mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Entergy would have reduced its income tax expense in 2011 by roughly 7% X $1,653 mil, or by $116 mil. And thus, its normalized 2011 After-tax Net Income would have increased by 12%, or by $116 mil divided by $945 mil.
In addition, Entergy had a net Deferred Income Tax Liability of a gigantic $8,168 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,634 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of a monstrous $1,634 mil in 2011.
Therefore in total, the After-tax Net Income of Southern Co would have increased by $1,750 mil in 2011, yeah that's $1.75 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Entergy, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to substantially reduce the utility costs Entergy charges its many customers in Louisiana, Mississippi, Arkansas, and Texas.
CenturyLink
Monroe, LA-based CenturyLink, which just operates in the US, generated Pretax Income of $948 mil in 2011. Its Total Income Tax Expense was $375 mil, for an effective income tax rate of 39.6%. And thus its After-tax Net Income in 2011 was $573 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, CenturyLink would have reduced its income tax expense in 2011 by roughly 7% X $948 mil, or by $66 mil. And thus, its 2011 After-tax Net Income would have increased by 12%, or by $66 mil divided by $573 mil.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of CenturyLink, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the fees CenturyLink charges its customers.
CLECO
KENTUCKY
Humana
The Louisville, KY-based Health Insurance Corp Humana generated Pretax income for 2011 of $2,235 mil. Its Income Tax Expense in 2011 was $816 mil, for an effective income tax rate of 36.5%. And thus its After-tax Net Income in 2011 was $1,419 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Humana would have reduced its income tax expense in 2011 by $156 mil, or by 7% X $2,235. And thus, its 2011 After-tax Core Net Income would have increased by 11%, or by $156 mil divided by $1,419 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Humana, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the exorbitantly high insurance premiums that Humana charges. By such fair, patriotic actions, US Big Health Insurance Corps will bend down the long-term US health care cost curve, which is so critical to substantially reducing the US deficit and making US businesses, especially smaller ones, much more competitive.
Brown Forman
SOUTH CAROLINA
SCANA
Cayce, SC-based Utility Corp SCANA, which operates just in the US, generated Pretax Income of $555 mil in 2011. Its Total Income Tax Expense was $168 mil, for an effective income tax rate of 30.3%. And thus its After-tax Net Income in 2011 was $387 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, SCANA would have reduced its income tax expense in 2011 by roughly 7% X $555 mil, or by $39 mil. And thus, its normalized 2011 After-tax Net Income would have increased by 10%, or by $39 mil divided by $387 mil.
In addition, SCANA had a net Deferred Income Tax Liability of $1,507 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $301 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $301 mil in 2011.
Therefore in total, the After-tax Net Income of SCANA would have increased by $340 mil in 2011 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of SCANA, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the utility costs of SCANA’s customers.
NORTH CAROLINA
Lowes
The well run, Mooresville, NC-based Retailer Lowes, which operates just in the US, generated Pretax Income of $2,906 mil in FYE Jan 2012. Its Total Income Tax Expense in FYE 2012 was $1,067 mil, for an effective income tax rate of 36.7%. And thus its After-tax Net Income in FYE 2012 was $1,839 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of FYE 2012, Lowes would have reduced its income tax expense in FYE 2012 by roughly $203 mil, or by 7% X $2,906 mil. And thus, its 2012 After-tax Net Income would have increased by 11%, or by $203 mil divided by $1,839 mil. And its Equivalent Pretax Income in FYE 2012 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Lowes, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to move more of Lowes many part-time workers to full-time status, to elevate the wages of its workers to a much more livable status, and to hire additional full-time workers.
BB&T
Winston-Salem, NC-based Bank BB&T, which operates predominantly in the US, generated Pretax Income of $1,628 mil in 2011.
BB&T’s Total Income Tax Expense in 2011 was only $296 mil, for an effective income tax rate of 18.2%.
So what’s going on with BB&T’s low effective income tax rate?
It’s all about tax subsidies that it, and many other large financial institutions, are blessed with.
The tax benefit BB&T received for Tax Exempt Income totaled $135 mil in 2011, $125 mil in 2010, and $108 mil in 2009.
And the tax benefit BB&T received from Federal Tax Credits totaled $115 mil in 2011, $105 mil in 2010, and $78 mil in 2009.
Anyway, BB&T’s After-tax Net Income for 2011 was $1,332 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, BB&T would have reduced its income tax expense in 2011 by roughly $114 mil, or by 7% X $1,628 mil. And thus, its 2011 After-tax Net Income would have increased by 9%, or by $114 mil divided by $1,332 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of BB&T, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to write down the principal balances of underwater home mortgages, to permit underwater homeowners to refinance their mortgages at the existing lower interest rates, to make more loans to small businesses, and to also charge a more reasonable interest rate on small business loans.
Further, these huge annual tax subsidies BB&T and other large financial institutions now receive should be eliminated.
Duke Energy
Charlotte, NC-based Utility Corp Duke Energy operates not just in North Carolina, but also in Ohio, Indiana and Kentucky. It generated Pretax Income in the US of $1,780 mil in 2011, which was 72% of its worldwide income of $2,465 mil. Its Total Income Tax Expense was $752 mil, for an effective income tax rate of 30.5%. And thus its After-tax Net Income in 2011 was $1,713 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Duke Energy would have reduced its income tax expense in 2011 by roughly 7% X $1,780 mil, or by $125 mil. And thus, its 2011 After-tax Net Income would have increased by 7%, or by $125 mil divided by $1,713 mil.
In addition, Duke Energy had a net Deferred Income Tax Liability of a gigantic $7,304 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,052 mil in 2011, assuming its US Deferred Income Tax Liability mix is consistent with its 72% US Pretax Income mix. Under this assumption, Duke Energy would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $1,052 mil in 2011.
Therefore in total, the After-tax Net Income of Duke Energy would have increased by $1,177 mil in 2011, yeah that’s nearly $1.2 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Duke Energy, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to substantially reduce the utility costs of Duke Energy’s many customers in North Carolina, Ohio, Indiana and Kentucky.
Progress Energy
Raleigh, NC-based Utility Corp Progress Energy generated Pretax Income of $910 mil in 2011. Its Total Income Tax Expense was $323 mil, for an effective income tax rate of 35.5%. And thus its After-tax Net Income in 2011 was $587 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Progress Energy would have reduced its income tax expense in 2011 by roughly 7% X $910 mil, or by $64 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $64 mil divided by $587 mil.
In addition, Progress Energy had a net Deferred Income Tax Liability of $1,783 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $357 mil in 2011. Therefore, Progress Energy would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $357 mil in 2011.
In total, the After-tax Net Income of Progress Energy would have increased by $421 mil in 2011 by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Progress Energy, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the utility costs of Progress Energy’s customers.
Reynolds American
Winston-Salem, NC-based Cigarette Corp Reynolds American generated Pretax Income of $2,186 mil in 2011. Its Total Income Tax Expense in 2011 was $780 mil, for an effective income tax rate of 35.7%. And thus its After-tax Net Income in 2011 was $1,406 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Reynolds American would have reduced its income tax expense in 2011 by roughly $153 mil, or by 7% X $2,186 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $153 mil divided by $1,406 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Reynolds American, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used by Reynolds American to make research contributions to fund health care research in North Carolina’s key Research Triangle in an initiative to help bend down the long-term US health care cost curve.
Lorillard
Greensboro, NC-based Cigarette Corp Lorillard generated Pretax Income of $1,770 mil in 2011. Its Total Income Tax Expense in 2011 was $654 mil, for an effective income tax rate of 36.9%. And thus its After-tax Net Income in 2011 was $1,116 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Lorillard would have reduced its income tax expense in 2011 by roughly $124 mil, or by 7% X $1,770 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $124 mil divided by $1,116 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Lorillard, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used by Lorillard to make research contributions to fund health care research in North Carolina’s key Research Triangle in an initiative to help bend down the long-term US health care cost curve.
Laboratory Corp of America
Very well run, Burlington, NC-based Laboratory Corp of America generated US Pretax Income of $834 mil in 2011, 96% of its Worldwide Pretax Income of $866 mil. Its Total Income Tax Expense in 2011 was $333 mil, for an effective income tax rate of 38%. And thus its After-tax Net Income in 2011 was $533 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Laboratory Corp of America would have reduced its income tax expense in 2011 by roughly $58 mil, or by 7% X $834 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $58 mil divided by $533 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Laboratory Corp of America, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used by Laboratory Corp of America to hire even more exceptionally qualified full-time health care workers.
Bank of America
Nucor
VF Corp
Goodrich
Family Dollar Stores
VIRGINIA
Altria Group
Richmond, VA-based Cigarette Corp Altria Group generated Pretax Income of $5,582 mil in 2011, nearly all in the US. Its Total Income Tax Expense in 2011 was $2,189 mil, for an effective income tax rate of 39.2%. And thus its After-tax Net Income in 2011 was $3,393 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Altria Group would have reduced its income tax expense in 2011 by roughly $391 mil, or by 7% X $5,582 mil. And thus, its 2011 After-tax Net Income would have increased by 12%, or by $391 mil divided by $3,393 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Altria Group, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used by Altria Group to make research contributions to fund health care research, mainly in Virginia and in Maryland, in an initiative to help bend down the long-term US health care cost curve.
Capital One Financial
Well run, McLean, VA-based Financial Institution Capital One Financial, which operates predominantly in the US, generated Pretax Income of $4,587 mil in 2011.
Capital One Financial’s Total Income Tax Expense in 2011 was $1,334 mil, for an effective income tax rate of a modest 29.1%.
So what’s going on with Capital One Financial's lower effective income tax rate?
It’s all about tax subsidies that it, and many other large financial institutions, are blessed with.
The tax benefit Capital One Financial received for its Tax Credits, including for Low-Income Housing and for New Markets, totaled approximately $197 mil in 2011, $143 mil in 2010, and $87 mil in 2009.
Anyway, Capital One Financial’s After-tax Net Income for 2011 was $3,253 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Capital One Financial would have reduced its income tax expense in 2011 by roughly $321 mil, or by 7% X $4,587 mil. And thus, its 2011 After-tax Net Income would have increased by 10%, or by $321 mil divided by $3,253 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Capital One Financial, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to cut interest rates and late fees charged to its credit card customers.
Further, these huge annual tax subsidies Capital One Financial and other large financial institutions now receive should be eliminated.
General Dynamics
Well run, Falls Church, VA-based US Defense Contractor General Dynamics generated US Pretax Income of $3,245 mil in 2011, 87% of its Worldwide Pretax Income of $3,718 mil. Its Total Income Tax Expense in 2011 was $1,166 mil, for an effective income tax rate of 31.4%, aided some by lower foreign income tax rates, by US production tax deductions, and by US tax credits. And thus its After-tax Net Income in 2011 was $2,552 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, General Dynamics would have reduced its income tax expense in 2011 by roughly $227 mil, or by 7% X $3,245 mil. And thus, its 2011 After-tax Net Income would have increased by 9%, or by $227 mil divided by $2,552 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of US Defense Contractor General Dynamics, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be offset by the US Government reducing substantially the amounts it pays to US Defense Contractors like General Dynamics in its many huge dollar US Government contracts with them. This wise US Government cost-cutting initiative will help much to reduce the US Deficit.
Northrop Grumman
Well run, Falls Church, VA-based US Defense Contractor Northrop Grumman generated Pretax Income of $3,083 mil in 2011, nearly all earned in the US. Its Total Income Tax Expense in 2011 was $997 mil, for an effective income tax rate of 32.3%. And thus its After-tax Net Income in 2011 was $2,086 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Northrop Grumman would have reduced its income tax expense in 2011 by roughly $216 mil, or by 7% X $3,083 mil. And thus, its 2011 After-tax Net Income would have increased by 10%, or by $216 mil divided by $2,086 mil. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of US Defense Contractor Northrop Grumman, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be offset by the US Government reducing substantially the amounts it pays to US Defense Contractors like Northrop Grumman in its many huge dollar US Government contracts with them. This wise US Government cost-cutting initiative will help much to reduce the US Deficit.
Norfolk Southern
The extremely well run, Norfolk, VA-based Norfolk Southern, which operates just in the US, generated Pretax Income of $2,918 mil in 2011. Its Total Income Tax Expense was $1,002 mil, for an effective income tax rate of 34.3%. And thus its After-tax Net Income in 2011 was $1,916 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Norfolk Southern would have reduced its income tax expense in 2011 by roughly 7% X $2,918 mil, or by $204 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $204 mil divided by $1,916 mil.
In addition, Norfolk Southern had a net Deferred Income Tax Liability of a gigantic $7,486 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all railroad corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,497 mil, and thus it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of a monstrous $1,497 mil in 2011.
Therefore in total, the After-tax Net Income of Norfolk Southern would have increased by $1,701 mil in 2011, yeah that's $1.7 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Norfolk Southern, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce the transportation costs Norfolk Southern charges all of its customers, particularly its small business customers. And some of these additional Norfolk Southern earnings should also be used by Norfolk Southern doing its part in helping solve the country's long-term energy problem by making wise, measured, patriotic investments in things like mass transit.
Dominion Resources
The well run, Richmond, VA-based Utility Corp Dominion Resources, which operates solely in the US, generated Pretax Income of $2,171 mil in 2011. Its Total Income Tax Expense was $745 mil, for an effective income tax rate of 34.3%. And thus its After-tax Net Income in 2011 was $1,426 mil.
If you assume the US federal income tax rate would have dropped from 35% to 28% for all of 2011, Dominion Resources would have reduced its income tax expense in 2011 by roughly 7% X $2,171 mil, or by $152 mil. And thus, its 2011 After-tax Net Income would have increased by 11%, or by $152 mil divided by $1,426 mil.
In addition, Dominion Resources had a net Deferred Income Tax Liability of a huge $5,195 mil at the end of 2011, caused by its heavy investment in Property, Plant and Equipment, as do all utility corps. Thus, ignoring state income taxes, its US federal Deferred Income Tax Liability would have to be reduced by $1,039 mil, and it would have recorded an additional income tax benefit, and thus additional After-tax Net Income, of $1,039 mil in 2011, related to this trade off.
Therefore in total, the After-tax Net Income of Dominion Resources would have increased by $1,191 mil in 2011, yeah that’s nearly $1.2 bil, by this key trade off included in the Obama Administration's wise Framework For Business Tax Reform. And its Equivalent Pretax Income in 2011 would have increased by substantially more.
In fairness to all of US society, some of these substantial additional continuing annual Equivalent Pretax Earnings increases of Dominion Resources, resulting from this wise trade off included in the President's Framework For Business Tax Reform, should be used to reduce substantially the utility costs of Dominion Resources' many customers.
SAIC
Smithfield Foods
Advance Auto Parts
Dollar Tree
Carmax Inc
Computer Sciences Corp
Gannett Co Inc
Much more to come!
