These 40 US Technology Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $48,197 mil, which was down 6% from the $51,286 mil earned in the 1Q 2012.
On the other hand, these same 40 US Technology Corps generated GAAP Total After-tax Net Income which was up 1% in the 1Q 2013 as compared with the 1Q 2012.
So, what's up with the 7% positive earnings spread from the down 6% Pretax Income in the 1Q 2013 to the up 1% After-tax Net Income in the 1Q 2013?
Well, it's all about the effective income tax rate.
In total, these 40 US Technology Corps slashed their effective income tax rates on a book basis from 22.1% of Pretax Income in the 1Q 2012 to only 16.2% in the 1Q 2013.
The accounting, income tax and finance staffs of so many of these Technology Corps earned their pay in the 1Q 2013.
But having the key US Technology Sector generating a total decline of 6% in Pretax earnings in the 1Q 2013 is just horrible for the US economy. And it's also terrible for US job creation in this critical US sector.
So, how does the US Congress react to this horrible 1Q 2013 quarter for the critical US Technology Sector? They flee Washington DC.
It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time. So how has the US Congress responded? Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation to spur the US economy and US job creation of the Obama Administration.
And so what has the US Congress done instead? They passed an immediate severe austerity Sequester which substantially harms US economic growth and US job creation.
And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth? An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.
And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative? By ignoring its collapse.
And how does the US Congress react to this massive continuing effective income tax rate decline, not just by Big Technology Corps, but by nearly all Big Corps in all sectors? By continuing to twiddle its thumbs and doing nothing.
Do you really think that US Big Corps, which control the majority of the US Congress, are going to permit the US Congress to pass tax legislation which prevents them from continuing to substantially bump up their reported after-tax earnings, which drives these companies' stock prices and also drives the predominate portion of the pay of the top executives of these companies?
And do you really think that good, effective tax reform will pass when the Democratic Chairman of the Senate Finance Committee is Max K Street Baucus, who is retiring? Baucus should do the patriotic thing and step down immediately as head of the Senate Finance Committee. If the Democrats in the US Senate would kill their incredibly unsound Seniority practice, and instead would initiate a Best and Brightest practice to be the Heads of its Committees, then Maria Cantwell would be the Chairwoman of the Senate Finance Committee. But Ron Wyden is just a step back in ability from Cantwell, and having him chairing this critical committee would be a substantial improvement from where we are now.
Baucus, working closely mainly with US Senator Chuck Grassley, and with much help from US Representative Dave Camp, is the reason that all of these many massive tax loopholes have been granted to US Big Corps and to rich individuals over the years in the first place.
And US Big Corps are now demanding a pure territorial tax system which will let them reduce their effective income tax rates even more. What kind of a country have we become where the US Big Corps and the rich continue to get all of this massive tax largesse while the rest of the country continues to suffer so much economically?
It's all driven by a US Congress, despite loudly proclaiming otherwise, continuing to legislate only for the 1%.
Anyway, below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 40 Big US Technology Corps:
|1Q 2013||1Q 2012||GAAP|
|1Q 2013||GAAP||1Q 2012||GAAP||GAAP||Combined|
|1Q 2013||GAAP||Effective||1Q 2012||GAAP||Effective||Pretax||Net|
|mil $s||mil $s||mil $s||mil $s||mil $s||mil $s|
|US Big Technology|
|Thermo Fisher Scientific||343||2||0.6%||311||30||9.6%||32||60|
|Check Point Software||186||38||20.4%||183||40||21.9%||3||5|
|Maxim Integrated Products||152||23||15.1%||112||89||79.5%||40||106|
|Total all 40||48,197||7,823||16.2%||51,286||11,324||22.1%||(3,089)||412|
|Total Pretax Income % Decrease||-6.02%|
|Total After-tax Combined Net Income % Increase||1.03%|
|= Positive Income Tax Earnings Spread||7.05%|