In performing a quick review of SEC filings of large corps with an SEC State Location Code in New Jersey, I found 16 New Jersey Corps that had both Total Core Pretax Income above $5 bil, and also Total State Corporate Income Tax Loopholes Taken, at least the way I measure them, of at least $200 mil each, in the last dozen years.
My definition of Core Pretax Income here excludes very large Asset Impairment Charges, particularly from Goodwill Impairment, and also excludes very large Acquired In Process Research and Development Charges.
Below here is the effective state and local corporate income tax rates paid, which are computed by dividing the current state and local corporate income tax paid by the consolidated Core Pretax Income, both in total for the past twelve years for each of these 16 Big New Jersey Corps. These 16 Big New Jersey Corps below had a weighted average state and local corporate effective income tax rate paid of a very modest 2.09%, or a huge 77% discount to New Jersey’s current state statutory corporate income tax rate of 9.00%.
….…………………….....................Current…………………...State&Loc
….…………………….................State&Loc..Consolidated..Effective
….…………………….......................Tax……….Pretax………Tax Rate
….…………………….......................Paid……..Income……….Paid
….……………….…......................(Millions of Dollars)
16. Public Service Entrpr Grp.1,298……....17,591……...7.31%
15. Bed Bath & Beyond..............330…........7,349……...4.49%
14. NRG Energy……...................287…........7,201....…..3.99%
13. Automatic Data Processing..527.........18,616…......2.83%
12. Merck..............................2,703….....107,889*…....2.51%
11. JNJ…...............................2,980**....134,152*….....2.22%
10. Ingersoll-Rand, plc***………196**……..9,898*….....1.98%
..9. Campbell Soup....................232…….....12,192……...1.90%
..8. AT&T(1998-2004)..............710..........38,045........1.87%
..7. Honeywell..........................406…….....25,881*…...1.57%
..6. Prudential Financial............351……....24,585……...1.43%
..5. Becton Dickinson.................145……....10,413……...1.39%
..4. Schering-Plough(98-2008)..258.........19,749*.…...1.31%
..3. Tyco Intl, Ltd****…………....275………27,031*……..1.02%
..2. Wyeth(1998-2009)...............88……....34,285……...0.26%
..1. Chubb.....................................0….......20,513.…….0.00%
Total all 16………..................10,774….....515,390……..2.09%
* Excludes large Asset Impairment Charges, particularly related to Goodwill Impairment, and also excludes large Acquired In Process Research and Development Charges
** Current and Deferred State Income Tax Combined…..JNJ didn’t disclose its Current State Income Tax Paid separately, which should be markedly lower than the above $2,980 mil combined amount
***Ingersoll-Rand is presently an Ireland Corp, was previously a Bermuda Corp, and has a mailing address in New Jersey
****Tyco International, Ltd is presently a Swiss Corp, was previously a Bermuda Corp, and has a New Jersey mailing address
For the most recent 2009 year, the weighted average state and local corporate effective income tax rate paid by these Big New Jersey Corps was an even lower 2.04%.
Two additional Corps (Medco Health Solutions and Quest Diagnostics) were excluded from the above list of New Jersey Big Corps, even though they generated Total Pretax Income for the past 12 years of more than $5 bil. These two Corps were excluded because their Total State Corporate Income Tax Loopholes Taken were less than $200 mil each.
And then, below here is a summary of what I call a fair measure of the Total State Corporate Income Tax Loopholes Taken by each of these 16 Big New Jersey Corps for the past twelve years. In estimating what I think is a fair measurement of State Corporate Income Tax Loopholes Taken, for ease of computation, I started by multiplying the current New Jersey Statutory Corporate Income Tax Rate of 9.00% by the total Consolidated Pretax Income of each Big New Jersey Corp for the last twelve years. Then, I subtracted the actual total State and Local Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….........................NJ…….State&Loc....Resultant
………………….........….............Corporate..Effective.......Higher
………………….........………….........Tax……..Tax Rate….State&Loc Tax
………………..........…………...........Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
1.. JNJ………….......…………........9.00%.......2.22%...........9,094
2.. Merck.................................9.00%.......2.51%...........7,007
3.. Wyeth……….........................9.00%.......0.26%..........2,998
4.. AT&T..................................9.00%........1.87%..........2,714
5.. Tyco International, Ltd…….9.00%........1.02%..........2,158
6.. Honeywell…………................9.00%.......1.57%...........1,923
7.. Prudential Financial………....9.00%.......1.43%...........1,862
8.. Chubb…………………..............9.00%.......0.00%..........1,846
9.. Schering-Plough......………….9.00%.......1.31%...........1,519
10. Automatic Data Processing..9.00%.......2.83%...........1,148
11. Campbell Soup……..............9.00%.......1.90%..............865
12. Becton Dickinson………….....9.00%.......1.39%..............792
13. Ingersoll-Rand, plc…………..9.00%.......1.98%..............695
14. NRG Energy……...................9.00%.......3.99%..............361
15. Bed Bath & Beyond…...........9.00%.......4.49%..............331
16. Public Service Entrpr Grp...9.00%.......7.31%..............297
Total all 16………………………………………35,611 (yeah, $35.6 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken by these 16 New Jersey Big Corps was $19.4 bil, as compared to $35.6 bil for the past twelve years.
And then here’s an updated list of the 18 New Jersey Big Corps with Total Core Pretax Income of more than $5 bil for the most recent 12 years. This list is sorted by Pretax Income.
….…………………….....................Current……...Core…......State&Loc
….……………………...................State&Loc.Consolidated..Effective
….…………………….......................Tax………...Pretax……..Tax Rate
….…………………….......................Paid……....Income……….Paid
….……………….….........................(millions of dollars)
JNJ...........................................2,980.......134,152.......2.22%
Merck.......................................2,703.......107,889.......2.51%
AT&T............................................710........38,045.......1.87%
Wyeth(1998-2008)........................88.........34,285.......0.26%
Tyco International, Ltd................275........27,031.......1.02%
Honeywell....................................406........25,881.......1.57%
Prudential Financial......................351........24,585.......1.43%
Chubb...............................................0........20,513......0.00%
Schering-Plough(1998-2008)........258........19,749.......1.31%
Automatic Data Processing...........527........18,616.......2.83%
Public Service Enterprise Group.1,286........17,591.......7.31%
Campbell Soup..............................232.........12,192.......1.90%
Medco Health Solutions.................912........10,815.......8.43%
Becton Dickinson...........................145........10,413.......1.39%
Ingersoll-Rand, plc........................196.........9,898.......1.98%
Quest Diagnostics..........................531.........7,872.......6.75%
Bed Bath & Beyond........................330.........7,349.......4.49%
NRG Energy..................................287.........7,201.......3.99%
NJ Total for all 18 Corps.........12,217.....534,077.......2.29%
And below here is a listing of the 9 New Jersey Mid-sized Corps with Total Core Pretax Income for the most recent 6 years of at least $2 bil each, but which had Total Core Pretax Income for the most recent 12 years of less than $5 bil, and thus weren’t included in the above list of the 18 most profitable, Very Big New Jersey Corps.
.............................................Most Recent Six Years
............................................State&Local....(PTI).........Effective
............................................Corporate........Core......State&Local
..........State............................Income.........Pretax......Tax Rate
.......Corporations..................Tax Paid.......Income........Paid
................................................(Millions of Dollars)
Wyndham Worldwide..................21.............3,442.........0.61%
Hudson City Bancorp................177.............3,374.........5.25%
Everest Re Group, Ltd**...............0.............3,154.........0.00%
Lucent(2004-2006).................(28).............3,149........(0.89)%
C R Bard......................................65.............3,016.........2.16%
Dun & Bradstreet.........................88.............2,382.........3.69%
Celgene......................................196.............2,214.........8.85%
Cognizant Technology Solutions..53*............2,151.........2.46%
Sealed Air....................................64.............2,108.........3.04%
NJ Total for all 9......................636...........24,990.........2.55%
* Includes both State Current Income Taxes and State Deferred Income Tax Expense
** Bermuda Corp, but with New Jersey mailing address and New York CPA firm
Now let me take it to the next level of Mid-sized New Jersey publicly-held Corps. Below are the 3 New Jersey Corps with Total Core Pretax Income for the most recent 6 years of between $1.5 and $2.0 bil, and which were not already included in the above 18 most profitable, Very Big New Jersey Corps.
.......................................................................................Core
......................................................................................Pretax
New Jersey Corp(Industry)...........................................Income
...................................................................................(mils of $s)
Trane*(Heating&Air Conditioning Equipment)……………..1,924
Foster Wheeler AG**(Heavy Construction)………………....1,678
Commerce Bancorp 2004-2007(Banking)…………………...1,538
* Now owned by Ingersoll-Rand, plc
** Swiss Corp now, previously a Bermuda Corp, with a New Jersey mailing address
When you review the above three lists of the 30 Big and Mid-sized New Jersey Corps, you have to be very impressed with the quality and superb financial performance.
But this strong financial performance is but a drop in the bucket in comparison to what has been going on with US Big Oil and Gas Corps. There has been a massive income shift in the past decade from non-Big Oil and Gas Corps to Big Oil and Gas Corps, which has been devastating to all non-Big Oil and Gas businesses.
To illustrate how this massive income shift in the past decade has applied to New Jersey, there were 15 Very Profitable New Jersey non-Big Oil and Gas Big Corps, from the above list of 18, which were in existence for the entire past 12 years. The Total Core Pretax Income for these 15 New Jersey non-Big Oil and Gas Big Corps of $97.6 bil for the most recent two years was up 55% from the $62.9 bil earned a decade earlier.
On the other hand, the 35 US Oil and Gas Big Corps, 25 of which are based in Texas, generated Core Pretax Earnings of $373.7 bil for the most recent two years, which was an incredible 712% increase from the $46.0 bil earned a decade earlier. I'm not kidding!
Clearly, it would be wise for the US government to take action that would reverse this horrible income shift trend, which has severely damaged not just more than 95% of US businesses, but has also devastated US individuals, and all of federal, state and local governments. Not only has it resulted in much higher US unemployment, much higher US underemployment, and lower median US wages, but it also has resulted in a substantially higher portion of a family's take-home pay being used to pay for energy costs than that of a decade ago.
I think it only makes sense for the US government to eliminate the many massive tax loopholes that are granted to Big Oil and Gas Corps to reward them for generating these windfall profits. And the money raised here should be given as wise, lucrative tax incentives to all US businesses that effectively reduce their energy costs.
Such a tax plan, is a ten-fer:
.....higher US real GDP growth
.....lower US unemployment
.....lower US underemployment
.....higher US median wages
.....lower portion of take-home pay needed to fund energy costs
.....higher after-tax corporate profits for more than 95% of US businesses
.....significant reduction in the US deficit
.....better State government coffers
.....more competitive US firms
.....and a huge step toward US becoming energy independent
Now on to updating Massachusetts, Pennsylvania, Connecticut, Georgia and Indiana.
