In performing a quick review of SEC filings of large corps with an SEC State Location Code in Maryland, I found six corps with somewhat healthy State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these six larger Maryland Corps. These six larger Maryland Corps below had a weighted average state corporate effective income tax rate paid of a modest 4.44%, or a 46% discount to Maryland’s current state corporate income tax rate of 8.25%.
….……………………...............Current…………………......State
….…………………….................State...Consolidated..Effective
….…………………….................Tax……….Pretax………Tax Rate
….…………………….................Paid……..Income……….Paid
….……………….….................(Millions of Dollars)
..6. Marriott..........................430……...7,187……...5.98%
..5. Constellation Energy.......579........11,485.….....5.04%
..4. Coventry Health Care…...237……....5,175……...4.58%
..3. T Rowe Price Group........296………..6,826……...4.34%
..2. Lockheed Martin*….....1,062……...26,615……...3.99%
..1. McCormick........................71……....3,020……...2.35%
Total all 6………...................2,675…....60,308……...4.44%
* Current and Deferred State Tax Combined
Black & Decker was excluded from the above listing because it did not disclose its state income tax break down in its income tax footnotes.
For the five States I have studied so far, Maryland has by far both the highest effective state corporate income tax rate paid by its largest Corps for the last twelve years, and also by far the lowest discount from the current State Corporate Income Tax Rate. It looks to me like the State of Maryland is clearly outperforming the other States in this key metric, which bears so importantly on the critical fiscal status of each State.
…………………...State Tax Rate……...State
………………………….Paid By……...Corporate
……………………………State………...Income…….Percentage
…………………………Big Corps…....Tax Rate……..Discount
Maryland…………….4.44%.............8.25%...........46%
Massachusetts……..3.16%.............8.80%...........64%
California…………….2.39%..............8.84%...........73%
Illinois………………..1.97%..............7.30%...........73%
Pennsylvania……….2.25%..............9.99%...........77%
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 six larger Maryland 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 Maryland Corporate Income Tax Rate of 8.25% by the total Consolidated Pretax Income of each larger Maryland Corp for the last twelve years. Then, I subtracted the actual total State Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................MD…….....State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. Lockheed Martin………....8.25%.......3.99%...........1,134
2.. Constellation Energy......8.25%.......5.04%.............369
3.. T Rowe Price Group........8.25%.......4.34%.............267
4.. Coventry Health Care…...8.25%.......4.58%.............190
5.. McCormick…...................8.25%.......2.35%.............178
6.. Marriott……………………....8.25%.......5.98%.............163
Total all 6………………………………………….2,300 (yeah, $2.3 bil)
For the most recent twelve years, Maryland headquartered Coventry Health Care has paid substantially higher total corporate state income taxes (a tax rate of 4.58%, only a 44% discount from the Maryland's 8.25% current corporate income tax rate) than three of its huge competitors in the Health Insurance Industry. In comparison, Minnesota-based UnitedHealth Group paid a tax rate of 2.46%, a 75% discount from Minnesota's current tax rate of 9.80%, Indiana-based WellPoint paid a tax rate of 2.21%, a 74% discount from Indiana's current tax rate of 8.50%, and Pennsylvania-based Cigna paid a tax rate of only 1.41%, an 86% discount from Pennsylvania's current tax rate of 9.99%.
It looks like Maryland is also now studying the introduction of combined reporting to close tax loopholes many out-of-state Corps are taking advantage of. This is a very fertile area for tax collections since the actual state effective corporate income tax rates paid by so many Big US Corps are so incredibly low all over the country. It appears that the State of Maryland might be getting a bit of National assistance in this key State Budget helping initiative.
Also, from a fairness standpoint, the above effective Maryland Corporate State Income Tax Rates Paid by these six larger Corps in the past twelve years of 4.44%% is not that far off from the Maryland current state individual income tax rate, which is 4.75% for income of $3,000 up to $150,000, and 5.00% for $150,000 up to $300,000. However, some Maryland counties and the city of Baltimore have additional individual income taxes.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit.
Thursday, November 11, 2010
Massachusetts Larger Corps Have Paid Modest Amounts of State Corporate Income Taxes
In performing a quick review of SEC filings of large corps with an SEC State Location Code in Massachusetts, I found 12 Corps with healthy State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 12 larger Massachusetts Corps. These 12 larger Massachusetts Corps below had a weighted average state corporate effective income tax rate paid of a modest 2.92%, or a 67% discount to Massachusetts’ current state corporate income tax rate of 8.88%.
….……………………...............Current…………………......State
….…………………….................State...Consolidated..Effective
….…………………….................Tax……….Pretax………Tax Rate
….…………………….................Paid……..Income……….Paid
….……………….….................(Millions of Dollars)
.12. TJX…..............................684……..13,211……...5.18%
.11. State Street Corp...............97…....17,793……...4.60%
.10. Boston Scientific.............225.........5,141*.......4.38%
..9. Genzyme..........................161.........4,604*.......3.50%
..8. Staples………………….........315........10,643.….....2.96%
..7. Biogen.............................138……....5,003*…….2.76%
..6. Thermo Fisher Scientific..116……....4,773……...2.43%
..5. Covidien plc**(2004-09).228.........9,561.........2.38%
..4. Gillette(1998-2004)........175........12,298.........1.42%
..3. EMC.................................165……..13,575……....1.22%
..2. Waters…………....................28……....2,953……....0.95%
..1. Analog Devices..................28……....5,910……....0.47%
Total all 12………..................3,081…...105,465……...2.92%
* Exclusive of Acquired In-Process R&D and Goodwill Impairment
**Covidien plc is an Ireland Corp now, was previously a Bermuda Corp, and has a Boston, MA CPA firm
For the most recent 2009 year, the weighted state corporate effective income tax rate paid by these 12 larger Massachusetts Corps was an even lower 2.39%.
The huge Raytheon was not included above, even though it generated a massive $16.5 bil of pretax income in the past twelve years. Raytheon did not disclose the amounts of state income tax it paid. It passes on these costs to the US Government in its federal contracts.
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 12 larger Massachusetts 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 Massachusetts Corporate Income Tax Rate of 8.88% by the total Consolidated Pretax Income of each larger Massachusetts Corp for the last twelve years. Then, I subtracted the actual total State Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................MA…….....State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. EMC………….......…………....8.88%.......1.22%...........1,030
2.. Gillette............................8.88%.......1.42%.............907
3.. State Street Corp..............8.88%.......4.60%............748
4.. Staples……………...............8.88%.......2.96%.............622
5.. Covidien plc....................8.88%.......2.38%..............613
6.. Analog Devices………….....8.88%.......0.47%.............492
7.. TJX……………....................8.88%.......5.18%.............479
8.. Thermo Fisher Scientific..8.88%.......2.43%.............304
9.. Biogen.............................8.88%.......2.76%.............302
10. Genzyme.........................8.88%.......3.50%.............244
11. Waters......…………………...8.88%........0.95%.............232
12. Boston Scientific…..........8.88%........4.38%.............227
Total all 12…………………………………………6,200 (yeah, $6.2 bil)
For the past six years, the estimated total State Corporate Income Tax Loopholes Taken was $3.9 bil, as compared to $6.2 bil for the past twelve years.
I think it makes much more sense to balance a State’s budget by closing some of the larger Corp State Corporate Income Tax Loopholes, rather than by significantly reducing critical state services like education and citizen protection.
Also, I think it makes sense to use some of the funds from the closing of these larger Corp State Income Tax Loopholes to provide some wise, highly stimulative, directly-targeted, job-creating tax incentives to small and medium-sized businesses.
When you think about it, Massachusetts and California’s Silicon Valley, have all of this incredible innovative expertise that is presently dormant, for the most part. It needs to be unleashed in order to make the US more competitive on the world scene. And it also needs to be unleashed to bring the country out of its horrible jobless recovery. Principally the US government, but also the State Governments, need to create the strong stimulative environment to permit these two key areas of the country to thrive. Clearly, smart tax incentives are needed here, primarily targeted at research and technology, and particularly at computer software, computer infrastructure, green energy and medical science.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures, including computer software investments, they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit.
And since 40% of the graduate students in the country’s very best research universities are foreign students, then the last thing we should be doing is kicking these foreign students out of the country after they get their graduate degrees. They are needed here to grow the US economy. They are prime job creators.
Also, from a fairness standpoint, the above effective Massachusetts Corporate State Income Tax Rates Paid by these 12 larger Corps in the past year of 2.39% is extremely low in comparison with Massachusetts' current individual income tax rate of 5.30%.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 12 larger Massachusetts Corps. These 12 larger Massachusetts Corps below had a weighted average state corporate effective income tax rate paid of a modest 2.92%, or a 67% discount to Massachusetts’ current state corporate income tax rate of 8.88%.
….……………………...............Current…………………......State
….…………………….................State...Consolidated..Effective
….…………………….................Tax……….Pretax………Tax Rate
….…………………….................Paid……..Income……….Paid
….……………….….................(Millions of Dollars)
.12. TJX…..............................684……..13,211……...5.18%
.11. State Street Corp...............97…....17,793……...4.60%
.10. Boston Scientific.............225.........5,141*.......4.38%
..9. Genzyme..........................161.........4,604*.......3.50%
..8. Staples………………….........315........10,643.….....2.96%
..7. Biogen.............................138……....5,003*…….2.76%
..6. Thermo Fisher Scientific..116……....4,773……...2.43%
..5. Covidien plc**(2004-09).228.........9,561.........2.38%
..4. Gillette(1998-2004)........175........12,298.........1.42%
..3. EMC.................................165……..13,575……....1.22%
..2. Waters…………....................28……....2,953……....0.95%
..1. Analog Devices..................28……....5,910……....0.47%
Total all 12………..................3,081…...105,465……...2.92%
* Exclusive of Acquired In-Process R&D and Goodwill Impairment
**Covidien plc is an Ireland Corp now, was previously a Bermuda Corp, and has a Boston, MA CPA firm
For the most recent 2009 year, the weighted state corporate effective income tax rate paid by these 12 larger Massachusetts Corps was an even lower 2.39%.
The huge Raytheon was not included above, even though it generated a massive $16.5 bil of pretax income in the past twelve years. Raytheon did not disclose the amounts of state income tax it paid. It passes on these costs to the US Government in its federal contracts.
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 12 larger Massachusetts 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 Massachusetts Corporate Income Tax Rate of 8.88% by the total Consolidated Pretax Income of each larger Massachusetts Corp for the last twelve years. Then, I subtracted the actual total State Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................MA…….....State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. EMC………….......…………....8.88%.......1.22%...........1,030
2.. Gillette............................8.88%.......1.42%.............907
3.. State Street Corp..............8.88%.......4.60%............748
4.. Staples……………...............8.88%.......2.96%.............622
5.. Covidien plc....................8.88%.......2.38%..............613
6.. Analog Devices………….....8.88%.......0.47%.............492
7.. TJX……………....................8.88%.......5.18%.............479
8.. Thermo Fisher Scientific..8.88%.......2.43%.............304
9.. Biogen.............................8.88%.......2.76%.............302
10. Genzyme.........................8.88%.......3.50%.............244
11. Waters......…………………...8.88%........0.95%.............232
12. Boston Scientific…..........8.88%........4.38%.............227
Total all 12…………………………………………6,200 (yeah, $6.2 bil)
For the past six years, the estimated total State Corporate Income Tax Loopholes Taken was $3.9 bil, as compared to $6.2 bil for the past twelve years.
I think it makes much more sense to balance a State’s budget by closing some of the larger Corp State Corporate Income Tax Loopholes, rather than by significantly reducing critical state services like education and citizen protection.
Also, I think it makes sense to use some of the funds from the closing of these larger Corp State Income Tax Loopholes to provide some wise, highly stimulative, directly-targeted, job-creating tax incentives to small and medium-sized businesses.
When you think about it, Massachusetts and California’s Silicon Valley, have all of this incredible innovative expertise that is presently dormant, for the most part. It needs to be unleashed in order to make the US more competitive on the world scene. And it also needs to be unleashed to bring the country out of its horrible jobless recovery. Principally the US government, but also the State Governments, need to create the strong stimulative environment to permit these two key areas of the country to thrive. Clearly, smart tax incentives are needed here, primarily targeted at research and technology, and particularly at computer software, computer infrastructure, green energy and medical science.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures, including computer software investments, they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit.
And since 40% of the graduate students in the country’s very best research universities are foreign students, then the last thing we should be doing is kicking these foreign students out of the country after they get their graduate degrees. They are needed here to grow the US economy. They are prime job creators.
Also, from a fairness standpoint, the above effective Massachusetts Corporate State Income Tax Rates Paid by these 12 larger Corps in the past year of 2.39% is extremely low in comparison with Massachusetts' current individual income tax rate of 5.30%.
Wednesday, November 10, 2010
Pennsylvania Big Corps Have Paid Modest Amounts of State Corporate Income Taxes
In performing a quick review of SEC filings of large corps with an SEC State Location Code in Pennsylvania, I found 17 Corps with pretty large State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years.
ACE, Ltd. was included in the below list. It was established in the Cayman Islands tax haven jurisdiction, with HQs located in Bermuda. In 2008, it was relocated to Switzerland. PriceWaterhouseCooper's Philadelphia office has been its external CPA firm for its financial statements from 2005 on. Previously, its external CPA firm was PriceWaterhouseCooper's New York office.
Tyco Electronics, Ltd was also included in the below list. It is now a Swiss Corp. It was previously a Bermuda Corp. It's CPA firm is in Philly. The amounts below are just for the six years 2004-2009.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated core pretax income, which are exclusive of large Asset Impairments, both in total for the past twelve years for each of these 17 large Pennsylvania Corps. These 17 large Pennsylvania Corps below had a weighted average state corporate effective income tax rate paid of a very modest 1.98%, or a huge 80% discount to Pennsylvania’s current state corporate income tax rate of 9.99%.
….……………………............Current……………Core......State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
17. Sunoco………................452…......8,819……...5.13%
16. Comcast(2000-2009)..956…….23,671……...4.04%
15. Amerisource Bergen....248…......7,148……...3.47%
14. Hershey..…………..........249….....7,503.....….3.32%
13. PPG Industries.............334…....10,675……...3.13%
12. Mellon Financial..........323…....10,810……...2.99%
11. PNC Financial Svcs…....521…….23,367……...2.23%
10. PPL…...........................222…….10,496……...2.12%
..9. US Steel……………...........97…......5,497……...1.76%
..8. Cigna...........................229……..16,190……...1.41%
..7. Air Products & Chems..129........10,164.….....1.27%
..6. HJ Heinz......................149……..12,707……...1.17%
..5. Rohm&Haas(98-08)......60………..6,392……...0.94%
..4. Alcoa…………...............177……...24,115……...0.73%
..3. Tyco Electronics, Ltd....13...........6,834.........0.19%
..1. Lincoln National.............0*……...8,742……...0.00%
..1. ACE, Ltd.........................0*........16,426.........0.00%
Total all 17……….............4,159…...209,556……...1.98%
* I assumed no state income tax was paid, since there was nothing disclosed about it.
For the most recent year, the weighted state corporate effective income tax rate paid by these large Pennsylvania Corps was a much lower 0.55%.
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 17 large Pennsylvania 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 Pennsylvania Corporate Income Tax Rate of 9.99% by the total Consolidated Core Pretax Income of each large Pennsylvania Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................PA……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. Alcoa………….......…………..9.99%......0.73%...........2,232
2.. PNC Financial Services....9.99%.......2.23%...........1,813
3.. Comcast…………….............9.99%......4.04%...........1,409
4.. Cigna......……………………...9.99%.......1.41%...........1,388
5.. ACE, Ltd..........................9.99%.......0.00%..........1,150
6.. HJ Heinz…………….............9.99%.......1.17%..........1,120
7.. Air Products & Chemicals.9.99%.......1.27%.............886
8.. Lincoln National......………9.99%.......0.00%............873
9.. PPL………………………….......9.99%.......2.12%.............827
10. Mellon Financial……........9.99%.......2.99%............757
11. PPG Industries....…………..9.99%.......3.13%.............732
12. Tyco Electronics, Ltd.......9.99%.......0.19%.............670
13. Rohm & Haas………….........9.99%.......0.94%.............579
14. Hershey…………………........9.99%.......3.32%.............501
15. Amerisource Bergen.........9.99%......3.47%.............466
16. US Steel……………………......9.99%.......1.76%.............452
17. Sunoco..............................9.99%.......5.13%.............429
Total all 17…………………………………………16,285 (yeah, $16.3 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $10.8 bil, as compared to $16.3 bil for the past twelve years.
I think it makes much more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by significantly reducing critical state services like education and citizen protection. Also, I think it might make sense to use some of the funds from the closing of these Big Corp State Income Tax Loopholes to provide some wise, highly stimulative, job-creating tax incentives to small and medium-sized businesses.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit, with a bonus percentage for capital expenditures made by the very troubled Rust Belt manufacturers, like those in Pennsylvania.
At first glance, Pennsylvania’s corporate income tax rate of 9.99% seems high. However, it hasn’t prevented many of Pennsylvania’s Big Corps from paying very low effective tax rates, which averaged just 1.98% for the above 17 Corps. My hunch is that many profitable small and medium-sized Pennsylvania Corps are actually paying much higher than this average 1.98% tax rate paid by Pennsylvania Big Corps, but also much lower than the 9.99% statutory tax rate.
Also, from a fairness standpoint, the above effective Pennsylvania Corporate State Income Tax Rates Paid by these 17 Big Corps of 1.98% is pretty low in comparison with Pennsylvania’s current state individual income tax rate of 3.07%, which gets stepped up markedly in some Pennsylvania cities/counties by additional individual income taxes.
ACE, Ltd. was included in the below list. It was established in the Cayman Islands tax haven jurisdiction, with HQs located in Bermuda. In 2008, it was relocated to Switzerland. PriceWaterhouseCooper's Philadelphia office has been its external CPA firm for its financial statements from 2005 on. Previously, its external CPA firm was PriceWaterhouseCooper's New York office.
Tyco Electronics, Ltd was also included in the below list. It is now a Swiss Corp. It was previously a Bermuda Corp. It's CPA firm is in Philly. The amounts below are just for the six years 2004-2009.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated core pretax income, which are exclusive of large Asset Impairments, both in total for the past twelve years for each of these 17 large Pennsylvania Corps. These 17 large Pennsylvania Corps below had a weighted average state corporate effective income tax rate paid of a very modest 1.98%, or a huge 80% discount to Pennsylvania’s current state corporate income tax rate of 9.99%.
….……………………............Current……………Core......State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
17. Sunoco………................452…......8,819……...5.13%
16. Comcast(2000-2009)..956…….23,671……...4.04%
15. Amerisource Bergen....248…......7,148……...3.47%
14. Hershey..…………..........249….....7,503.....….3.32%
13. PPG Industries.............334…....10,675……...3.13%
12. Mellon Financial..........323…....10,810……...2.99%
11. PNC Financial Svcs…....521…….23,367……...2.23%
10. PPL…...........................222…….10,496……...2.12%
..9. US Steel……………...........97…......5,497……...1.76%
..8. Cigna...........................229……..16,190……...1.41%
..7. Air Products & Chems..129........10,164.….....1.27%
..6. HJ Heinz......................149……..12,707……...1.17%
..5. Rohm&Haas(98-08)......60………..6,392……...0.94%
..4. Alcoa…………...............177……...24,115……...0.73%
..3. Tyco Electronics, Ltd....13...........6,834.........0.19%
..1. Lincoln National.............0*……...8,742……...0.00%
..1. ACE, Ltd.........................0*........16,426.........0.00%
Total all 17……….............4,159…...209,556……...1.98%
* I assumed no state income tax was paid, since there was nothing disclosed about it.
For the most recent year, the weighted state corporate effective income tax rate paid by these large Pennsylvania Corps was a much lower 0.55%.
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 17 large Pennsylvania 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 Pennsylvania Corporate Income Tax Rate of 9.99% by the total Consolidated Core Pretax Income of each large Pennsylvania Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................PA……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. Alcoa………….......…………..9.99%......0.73%...........2,232
2.. PNC Financial Services....9.99%.......2.23%...........1,813
3.. Comcast…………….............9.99%......4.04%...........1,409
4.. Cigna......……………………...9.99%.......1.41%...........1,388
5.. ACE, Ltd..........................9.99%.......0.00%..........1,150
6.. HJ Heinz…………….............9.99%.......1.17%..........1,120
7.. Air Products & Chemicals.9.99%.......1.27%.............886
8.. Lincoln National......………9.99%.......0.00%............873
9.. PPL………………………….......9.99%.......2.12%.............827
10. Mellon Financial……........9.99%.......2.99%............757
11. PPG Industries....…………..9.99%.......3.13%.............732
12. Tyco Electronics, Ltd.......9.99%.......0.19%.............670
13. Rohm & Haas………….........9.99%.......0.94%.............579
14. Hershey…………………........9.99%.......3.32%.............501
15. Amerisource Bergen.........9.99%......3.47%.............466
16. US Steel……………………......9.99%.......1.76%.............452
17. Sunoco..............................9.99%.......5.13%.............429
Total all 17…………………………………………16,285 (yeah, $16.3 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $10.8 bil, as compared to $16.3 bil for the past twelve years.
I think it makes much more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by significantly reducing critical state services like education and citizen protection. Also, I think it might make sense to use some of the funds from the closing of these Big Corp State Income Tax Loopholes to provide some wise, highly stimulative, job-creating tax incentives to small and medium-sized businesses.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit, with a bonus percentage for capital expenditures made by the very troubled Rust Belt manufacturers, like those in Pennsylvania.
At first glance, Pennsylvania’s corporate income tax rate of 9.99% seems high. However, it hasn’t prevented many of Pennsylvania’s Big Corps from paying very low effective tax rates, which averaged just 1.98% for the above 17 Corps. My hunch is that many profitable small and medium-sized Pennsylvania Corps are actually paying much higher than this average 1.98% tax rate paid by Pennsylvania Big Corps, but also much lower than the 9.99% statutory tax rate.
Also, from a fairness standpoint, the above effective Pennsylvania Corporate State Income Tax Rates Paid by these 17 Big Corps of 1.98% is pretty low in comparison with Pennsylvania’s current state individual income tax rate of 3.07%, which gets stepped up markedly in some Pennsylvania cities/counties by additional individual income taxes.
Tuesday, November 9, 2010
Illinois Big Corps Have Paid So Little in State Corporate Income Taxes
In performing a quick review of SEC filings of large corps with an SEC State Location Code in Illinois, I found 21 corps with pretty large State Corporate Income Tax Loopholes Taken, as I define them, of at least $300 mil each, for the last dozen years.
Boeing was excluded, because even though it is now headquartered in Chicago, it has an SEC State Location Code of Washington.
Accenture plc was included. Many years ago, it was part of the Chicago-based Arthur Andersen partnership. It went public in an IPO early in the 2000 decade and switched from a partnership form to Accenture Ltd., a corporation legally based in the tax haven of Bermuda. In 2009, it moved its legal residence from Bermuda to Ireland, another tax haven. It has always had two different Chicago CPA firms as its external auditors. It should be pointed out that in Fortune's ranking of its largest 500 Global firms, from 2005 to 2009, Fortune had Accenture's City listed as New York City.
It is pretty clear that state corporate income tax planning of these large Illinois Corps has been front and center. But the problem here is that this has been very detrimental to the State of Illinois, which is in such desperate financial shape.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 21 large Illinois Corps. Some pundits might call this a Race to the Bottom, or which large Illinois Corp can pay the least state corporate income taxes. Well, it looks like insurance corps Allstate and Old Republic won out, with Sara Lee just nosing out both Baxter and Caterpillar for third place, at the wire. These 21 large Illinois Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.11%, or a 71% discount to Illinois’ current state corporate income tax rate of 7.30%.
….……………………............Current…………………......State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
21. Exelon.........................1,359.......27,903.......4.87%
20. Walgreens………...........1,150…....27,781……..4.14%
19. Tribune………..................349……...9,382……..3.72%
18. Discover Fincl Svcs........270…......7,811……..3.46%
17. Fortune Brands..............313.........9,097*......3.44%
16. Kraft Foods………….......1,319…....43,055....….3.06%
15. AON…………………...........275….....10,034……..2.74%
14. McDonalds……............1,029….....41,669……...2.47%
13. Illinois Tool Works........509……..21,129……....2.41%
12. Sears Holdings…............474……..23,910……...1.98%
11. Accenture plc................345........20,724........1.66%
10. Archer Daniels Midland.309….....17,567……...1.76%
..9. Deere…..........................258……..16,768……...1.54%
..8. Northern Trust...............131….....10,176……...1.29%
..7. Abbott Labs...................619……..48,287……...1.28%
..6. Wrigley...........................75………..6,302……...1.19%
..5. Caterpillar…………..........315……...30,412……...1.04%
..4. Baxter……......................161……....16,961……...0.95%
..3. Sara Lee.........................70..........13,083*.......0.54%
..1. Old Republic Intl...............0...........4,318........0.00%
..1. Allstate.............................0.........36,823........0.00%
Total all 21………..............9,330…....443,192……...2.11%
* Exclusive of Asset Impairments
For the most recent six years, the weighted state corporate effective income tax rate paid by these 21 large Illinois corps was an even lower 2.02%.
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 21 large Illinois 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 Illinois Corporate Income Tax Rate of 7.30% by the total Consolidated Pretax Income of each large Illinois Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................IL……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1. Abbott Labs………….......…7.30%.......1.28%...........2,906
2. Allstate............................7.30%......0.00%...........2,688
3. McDonalds………….........…7.30%.......2.47%..........2,013
4. Caterpillar……………..........7.30%.......1.04%..........1,905
5. Kraft Foods......………………7.30%.......3.06%..........1,824
6. Sears Holdings……………....7.30%.......1.98%...........1,271
7. Accenture plc..................7.30%........1.66%...........1,168
8. Baxter………..………............7.30%.......0.95%..........1,077
9. Illinois Tool Works......……7.30%.......2.41%..........1,033
10. Archer Daniels Midland…7.30%.......1.76%............973
11. Deere…………………………...7.30%.......1.54%............966
12. Sara Lee..........................7.30%........0.54%...........885
13. Walgreens........………….....7.30%.......4.14%............878
14. Exelon.............................7.30%.......4.87%............678
15. Northern Trust………….....7.30%.......1.29%.............612
16. AON…....………………….......7.30%......2.74%.............457
17. Wrigley……………………......7.30%.......1.19%.............385
18. Fortune Brands................7.30%.......3.44%.............351
19. Tribune……………...............7.30%......3.72%............336
20. Old Republic Intl.............7.30%.......0.00%............315
21. Discover Fincl Svcs...........7.30%......3.46%............300
Total all 21………………………………………23,068 (yeah, $23.1 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $14.2 bil, as compared to $23.1 bil for the past twelve years.
I think it makes much more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by either drastically reducing critical state services like education and citizen protection, or by significantly increasing state university tuition.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit, with a bonus percentage for capital expenditures made by troubled manufacturers, like some in Illinois. I wouldn't give the bonus investment tax credit percentage to huge companies.
Also, from a fairness standpoint, the above effective Illinois Corporate State Income Tax Rates Paid by these 21 Big Corps of 2.11% is low in comparison with Illinois’ current individual income tax rate of 3.00%.
Boeing was excluded, because even though it is now headquartered in Chicago, it has an SEC State Location Code of Washington.
Accenture plc was included. Many years ago, it was part of the Chicago-based Arthur Andersen partnership. It went public in an IPO early in the 2000 decade and switched from a partnership form to Accenture Ltd., a corporation legally based in the tax haven of Bermuda. In 2009, it moved its legal residence from Bermuda to Ireland, another tax haven. It has always had two different Chicago CPA firms as its external auditors. It should be pointed out that in Fortune's ranking of its largest 500 Global firms, from 2005 to 2009, Fortune had Accenture's City listed as New York City.
It is pretty clear that state corporate income tax planning of these large Illinois Corps has been front and center. But the problem here is that this has been very detrimental to the State of Illinois, which is in such desperate financial shape.
Below here is the effective state corporate income tax rates paid, which are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each of these 21 large Illinois Corps. Some pundits might call this a Race to the Bottom, or which large Illinois Corp can pay the least state corporate income taxes. Well, it looks like insurance corps Allstate and Old Republic won out, with Sara Lee just nosing out both Baxter and Caterpillar for third place, at the wire. These 21 large Illinois Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.11%, or a 71% discount to Illinois’ current state corporate income tax rate of 7.30%.
….……………………............Current…………………......State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
21. Exelon.........................1,359.......27,903.......4.87%
20. Walgreens………...........1,150…....27,781……..4.14%
19. Tribune………..................349……...9,382……..3.72%
18. Discover Fincl Svcs........270…......7,811……..3.46%
17. Fortune Brands..............313.........9,097*......3.44%
16. Kraft Foods………….......1,319…....43,055....….3.06%
15. AON…………………...........275….....10,034……..2.74%
14. McDonalds……............1,029….....41,669……...2.47%
13. Illinois Tool Works........509……..21,129……....2.41%
12. Sears Holdings…............474……..23,910……...1.98%
11. Accenture plc................345........20,724........1.66%
10. Archer Daniels Midland.309….....17,567……...1.76%
..9. Deere…..........................258……..16,768……...1.54%
..8. Northern Trust...............131….....10,176……...1.29%
..7. Abbott Labs...................619……..48,287……...1.28%
..6. Wrigley...........................75………..6,302……...1.19%
..5. Caterpillar…………..........315……...30,412……...1.04%
..4. Baxter……......................161……....16,961……...0.95%
..3. Sara Lee.........................70..........13,083*.......0.54%
..1. Old Republic Intl...............0...........4,318........0.00%
..1. Allstate.............................0.........36,823........0.00%
Total all 21………..............9,330…....443,192……...2.11%
* Exclusive of Asset Impairments
For the most recent six years, the weighted state corporate effective income tax rate paid by these 21 large Illinois corps was an even lower 2.02%.
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 21 large Illinois 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 Illinois Corporate Income Tax Rate of 7.30% by the total Consolidated Pretax Income of each large Illinois Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
……………………….....................IL……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1. Abbott Labs………….......…7.30%.......1.28%...........2,906
2. Allstate............................7.30%......0.00%...........2,688
3. McDonalds………….........…7.30%.......2.47%..........2,013
4. Caterpillar……………..........7.30%.......1.04%..........1,905
5. Kraft Foods......………………7.30%.......3.06%..........1,824
6. Sears Holdings……………....7.30%.......1.98%...........1,271
7. Accenture plc..................7.30%........1.66%...........1,168
8. Baxter………..………............7.30%.......0.95%..........1,077
9. Illinois Tool Works......……7.30%.......2.41%..........1,033
10. Archer Daniels Midland…7.30%.......1.76%............973
11. Deere…………………………...7.30%.......1.54%............966
12. Sara Lee..........................7.30%........0.54%...........885
13. Walgreens........………….....7.30%.......4.14%............878
14. Exelon.............................7.30%.......4.87%............678
15. Northern Trust………….....7.30%.......1.29%.............612
16. AON…....………………….......7.30%......2.74%.............457
17. Wrigley……………………......7.30%.......1.19%.............385
18. Fortune Brands................7.30%.......3.44%.............351
19. Tribune……………...............7.30%......3.72%............336
20. Old Republic Intl.............7.30%.......0.00%............315
21. Discover Fincl Svcs...........7.30%......3.46%............300
Total all 21………………………………………23,068 (yeah, $23.1 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $14.2 bil, as compared to $23.1 bil for the past twelve years.
I think it makes much more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by either drastically reducing critical state services like education and citizen protection, or by significantly increasing state university tuition.
For maximum positive effect to the US economy and to US job creation, I think the US government should let businesses have a choice on the capital expenditures they make.....they could either take 100% first year expensing, or they could instead choose a refundable investment tax credit, with a bonus percentage for capital expenditures made by troubled manufacturers, like some in Illinois. I wouldn't give the bonus investment tax credit percentage to huge companies.
Also, from a fairness standpoint, the above effective Illinois Corporate State Income Tax Rates Paid by these 21 Big Corps of 2.11% is low in comparison with Illinois’ current individual income tax rate of 3.00%.
Monday, November 8, 2010
California Big Corps Have Paid So Little in State Corporate Income Taxes
In reviewing the SEC filings of large corps headquartered in California, it took me quite awhile before I finally found a gem….one that is actually paying a reasonably fair amount of Total State Corporate Income Tax.
Since going public, Google has paid a state corporate effective income tax rate of 6.18%, as compared to the current California State Corporate Income Tax Rate of 8.84%.
How about all the other really large California Corps?....Well, they really haven’t done too much to help the State of California get out of its horrible fiscal crisis.
Anyway, below here is the effective state corporate income tax paid rates for the last twelve years in total for the largest California Corps, which have taken advantage of what I call a fair way of measuring State Corporate Income Tax Loopholes of at least $500 mil each. In estimating this fair measurement of State Corporate Income Tax Loopholes, for ease of computation, I started by multiplying the current California Corporate Income Tax Rate of 8.84% by the total Consolidated Pretax Income of each large California headquartered Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
The below effective state corporate income tax rates paid are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each company. Some pundits might call this a Race to the Bottom, or which large California Corp can pay the least state corporate income taxes. Well, it looks like it was a blanket finish, with Mattel just nosing out McKesson and Hewlett-Packard. These 20 large California Corps below had a weighted average state effective tax rate paid of a very modest 2.39%, or a 73% discount to California’s current state corporate income tax rate of 8.84%.
….…………………….....Current…………………......State
….…………………….......State...Consolidated..Effective
….…………………….......Tax……….Pretax………...Tax
….…………………….......Paid……..Income……….Rate
….……………….….......(Millions of Dollars)
20. Google…………....1,685…….27,244……..6.18%
19. GAP………………......701…….16,945……..4.14%
18. Sempra Energy…...484…….12,209……..3.96%
17. Disney………….....1,864…….47,950……..3.89%
16. Cisco Systems…..2,582…....72,442……..3.56%
15. Oracle………........2,303…....65,612……..3.51%
14. Apple……….........1,784…….51,465……..3.47%
13. Qualcomm…….......776…....25,105……..3.09%
12. Countrywide Fincl..515…....18,595....….2.77%
11. Franklin Resources.390…....14,140……..2.76%
10. Wells Fargo……....2,461…..108,550……...2.27%
..9. Amgen………...........728…….34,933……...2.08%
..8. Intel…………….......1,981…..101,986……...1.94%
..7. Chevron…………...3,057…..211,552……...1.45%
..6. Oxy Petroleum….....731…….55,238……...1.32%
..5. Adobe Systems.........82……...6,741……...1.22%
..4. Applied Materials....151…….14,654……...1.03%
..3. Hewlett-Packard......525…….59,166……...0.89%
..2. McKesson………….......83………9,448……...0.88%
..1. Mattel……...................52………6,529……...0.80%
Total all 20……….......22,935….960,504……..2.39%
And then, below here is a summary of what I call a fair measure of the Total State Corporate Income Tax Loophole, computed as explained earlier above, for each of these twenty large California Corps for the past twelve years::
……………………….....................CA……......State…….Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
Chevron………….......…………...8.84%.......1.45%........15,644
Wells Fargo………….........……..8.84%.......2.27%.........7,135
Intel……………...........……........8.84%.......1.94%.........7,035
Hewlett-Packard......……………8.84%.......0.89%.........4,705
Oxy Petroleum……………........8.84%.......1.32%..........4,152
Cisco Systems………..……….....8.84%.......3.56%..........3,822
Oracle……………….......……......8.84%.......3.51%..........3,497
Apple………………......……….....8.84%.......3.47%..........2,766
Disney………………………….......8.84%.......3.89%..........2,375
Amgen…........…………………....8.84%.......2.08%..........2,360
Qualcomm…………........………..8.84%......3.09%..........1,443
Applied Materials…....………….8.84%.......1.03%.........1,144
Countryside Financial…………..8.84%......2.77%.........1,129
Franklin Resources……………...8.84%......2.76%............860
GAP………….......……………........8.84%......4.14%.............797
McKesson…………….......…….....8.84%......0.88%............752
Google………………......……….....8.84%.......6.18%............723
Sempra Energy……………..........8.84%......3.96%............595
Mattel…………......……………......8.84%......0.80%............525
Adobe Systems………….....……..8.84%......1.22%............514
Total all 20…………………………………………61,974 (yeah, $62 bil)
For the most recent five years, the weighted state corporate effective income tax rate paid by these twenty corps was 2.11%, and the related estimated total State Corporate Income Tax Loophole Taken was $40.7 bil, as compared to $62.0 bil for the past twelve years.
I think it makes more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by either drastically reducing critical state services like education and citizen protection, or by drastically increasing state university tuition.
Also, from a fairness standpoint, the above effective California Corporate State Effective Income Tax Rates Paid by these twenty Big Corps are so incredibly low in comparison with California’s current individual income tax rates, which for income amounts above $47,055 and up to $1 million, is a substantially higher 9.55%. Granted the stated California Corporate State Income Tax Rate is a much closer 8.84%, but the state corporate income tax rate actually paid by these twenty large California Corps averaged only 2.39%. That massive tax rate variance just doesn’t make any sense to me.
Since going public, Google has paid a state corporate effective income tax rate of 6.18%, as compared to the current California State Corporate Income Tax Rate of 8.84%.
How about all the other really large California Corps?....Well, they really haven’t done too much to help the State of California get out of its horrible fiscal crisis.
Anyway, below here is the effective state corporate income tax paid rates for the last twelve years in total for the largest California Corps, which have taken advantage of what I call a fair way of measuring State Corporate Income Tax Loopholes of at least $500 mil each. In estimating this fair measurement of State Corporate Income Tax Loopholes, for ease of computation, I started by multiplying the current California Corporate Income Tax Rate of 8.84% by the total Consolidated Pretax Income of each large California headquartered Corp for the last twelve years. Then, I subtracted the actual total State, and in some cases also Local, Corporate Income Taxes Paid by each of these Corps for the same twelve years.
The below effective state corporate income tax rates paid are computed by dividing the current state corporate income tax paid by the consolidated pretax income, both in total for the past twelve years for each company. Some pundits might call this a Race to the Bottom, or which large California Corp can pay the least state corporate income taxes. Well, it looks like it was a blanket finish, with Mattel just nosing out McKesson and Hewlett-Packard. These 20 large California Corps below had a weighted average state effective tax rate paid of a very modest 2.39%, or a 73% discount to California’s current state corporate income tax rate of 8.84%.
….…………………….....Current…………………......State
….…………………….......State...Consolidated..Effective
….…………………….......Tax……….Pretax………...Tax
….…………………….......Paid……..Income……….Rate
….……………….….......(Millions of Dollars)
20. Google…………....1,685…….27,244……..6.18%
19. GAP………………......701…….16,945……..4.14%
18. Sempra Energy…...484…….12,209……..3.96%
17. Disney………….....1,864…….47,950……..3.89%
16. Cisco Systems…..2,582…....72,442……..3.56%
15. Oracle………........2,303…....65,612……..3.51%
14. Apple……….........1,784…….51,465……..3.47%
13. Qualcomm…….......776…....25,105……..3.09%
12. Countrywide Fincl..515…....18,595....….2.77%
11. Franklin Resources.390…....14,140……..2.76%
10. Wells Fargo……....2,461…..108,550……...2.27%
..9. Amgen………...........728…….34,933……...2.08%
..8. Intel…………….......1,981…..101,986……...1.94%
..7. Chevron…………...3,057…..211,552……...1.45%
..6. Oxy Petroleum….....731…….55,238……...1.32%
..5. Adobe Systems.........82……...6,741……...1.22%
..4. Applied Materials....151…….14,654……...1.03%
..3. Hewlett-Packard......525…….59,166……...0.89%
..2. McKesson………….......83………9,448……...0.88%
..1. Mattel……...................52………6,529……...0.80%
Total all 20……….......22,935….960,504……..2.39%
And then, below here is a summary of what I call a fair measure of the Total State Corporate Income Tax Loophole, computed as explained earlier above, for each of these twenty large California Corps for the past twelve years::
……………………….....................CA……......State…….Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
Chevron………….......…………...8.84%.......1.45%........15,644
Wells Fargo………….........……..8.84%.......2.27%.........7,135
Intel……………...........……........8.84%.......1.94%.........7,035
Hewlett-Packard......……………8.84%.......0.89%.........4,705
Oxy Petroleum……………........8.84%.......1.32%..........4,152
Cisco Systems………..……….....8.84%.......3.56%..........3,822
Oracle……………….......……......8.84%.......3.51%..........3,497
Apple………………......……….....8.84%.......3.47%..........2,766
Disney………………………….......8.84%.......3.89%..........2,375
Amgen…........…………………....8.84%.......2.08%..........2,360
Qualcomm…………........………..8.84%......3.09%..........1,443
Applied Materials…....………….8.84%.......1.03%.........1,144
Countryside Financial…………..8.84%......2.77%.........1,129
Franklin Resources……………...8.84%......2.76%............860
GAP………….......……………........8.84%......4.14%.............797
McKesson…………….......…….....8.84%......0.88%............752
Google………………......……….....8.84%.......6.18%............723
Sempra Energy……………..........8.84%......3.96%............595
Mattel…………......……………......8.84%......0.80%............525
Adobe Systems………….....……..8.84%......1.22%............514
Total all 20…………………………………………61,974 (yeah, $62 bil)
For the most recent five years, the weighted state corporate effective income tax rate paid by these twenty corps was 2.11%, and the related estimated total State Corporate Income Tax Loophole Taken was $40.7 bil, as compared to $62.0 bil for the past twelve years.
I think it makes more sense to balance a State’s severely stressed budget by closing some of the huge Big Corp State Corporate Income Tax Loopholes, rather than by either drastically reducing critical state services like education and citizen protection, or by drastically increasing state university tuition.
Also, from a fairness standpoint, the above effective California Corporate State Effective Income Tax Rates Paid by these twenty Big Corps are so incredibly low in comparison with California’s current individual income tax rates, which for income amounts above $47,055 and up to $1 million, is a substantially higher 9.55%. Granted the stated California Corporate State Income Tax Rate is a much closer 8.84%, but the state corporate income tax rate actually paid by these twenty large California Corps averaged only 2.39%. That massive tax rate variance just doesn’t make any sense to me.
Saturday, November 6, 2010
Big Health Insurance Corps Pay So Little in State Corporate Income Tax
Two publicly-held health insurance corps dominate the US health insurance industry…UnitedHealth Group, HQed in Minnesota and WellPoint, HQed in Indiana. The pretax earnings of these two giants in the 2000s Lost Decade comprised more than 60% of the total earnings of the entire top six publicly-held corps in the health insurance industry.
In addition to these two giant corps, there are five other pretty large ones in this industry…CIGNA, Aetna, Humana, Coventry and Assurance.
In this study, I have dropped out Assurance because it decided to not disclose in its income tax footnotes in its annual reports filed with the SEC, the necessary state corporate income tax information…either its current state income tax paid or its state income tax element in its income tax rate reconciliation schedule.
Everyone is aware of how US Big Health Insurance Corps profits have gone to the moon in the 2000s Lost Decade. These six publicly-held health insurance corps generated Pretax Income in just 2009 of $19,114 mil, up an incredible 638% from the $2,591 mil earned a decade earlier, in 1999. Nearly all of these earnings were generated in the US.
But not everyone is aware of how these six Big Health Insurance Corps fared in helping their respective States solve their fiscal budget problems. Well, the record here flat out stinks.
For the last dozen years, these six corps paid an overall effective state corporate income tax rate of a dismal 2.43%, a 73% discount from the current 8.89% combined weighted statutory state corporate income tax rate of the six states these corps are located in.
The combined state corporate income tax loophole, due to the much lower state corporate income tax rate paid, was estimated to be an amazing $7.4 bil of state corporate income tax that was avoided by these six Big Health Insurance giants in the past dozen years. Man, these desperate States could certainly have used these massive amounts of lost funds.
…………………………………………….Effective
…………………..State………………....State…………......Current….State
……………………Tax…....Pretax……Tax….....SEC….Statutory...Tax
……………………Paid…..Income…..Rate…...State…….Tax….Loophole
…………………12 Years 1998-2009……....Location…Rate…..Amount
……………………...(mils of $s)………………………………..........(mils of $s)
UnitedHealth.1,014…..41,242…..2.46%.....MN…..9.80%.....3,028
WellPoint….......639….28,973…...2.21%.....IN…….8.50%.....1,824
Cigna………….....229…..16,190…...1.41%......PA…..9.99%......1,388
Aetna……….......462…..16,827…..2.75%.....CT…...7.50%........800
Humana……......205……6,099…..3.36%......KY…..6.00%........161
Coventry…….....237……5,175…..4.58%......MD….8.25%.........190
All Six Corps..2,786..114,506…..2.43%...All Six…8.89%.....7,391
It’s bad enough for Big Health Insurance companies to charge high premiums, to disallow so many insurance claims, and to be eventually getting the economic benefit of 30 million new insurance customers with the new Health Care Plan. But then for these Big Health Insurance giants to pile on by also taking advantage of many, massive State Corporate Income Tax Loopholes….that’s being clever by half.
The State Governors of MN, IN, PA, CT, KY, MD and other states should step up and correct this grossly unfair situation, which has so severely harmed many of their financially strapped State constituents.
And then just look at the below effective state corporate income tax rates paid by these Big Health Insurance Corps as compared with the top individual income tax rate in the same state:
.................................Corp Tax.......Top Individual
.................................Rate Paid.....Income Tax Rate
MN...UnitedHealth.......2.46%.............7.85%
IN...WellPoint..............2.21%..............3.40%
PA...Cigna....................1.41%...............3.07%
CT...Aetna...................2.75%..............6.50%
KY...Humana...............3.36%..............6.00%
MD...Coventry.............4.58%..............6.25%
I have to ask, how can it be fair for individuals in each of the above six states to be consistently paying such a substantially higher top individual income tax rate than the state corporate income tax rate these Big Health Insurance Corps HQed in their same state are paying? This comparative tax rate information has to make many people just furious!
Also, since US citizens are being hurt so severely by the actions of these Big Health Insurance giant corps, I think the Board of Directors of these Big Health Insurance Corps should be particularly vigilant in performing their required fiduciary responsibility of corporate oversight, and investigate the appropriateness of their Corps taking advantage of all of these many, massive amounts of State Corporate Income Tax Loopholes.
The many US citizens, in many States throughout the country, financially devastated by these Corporate State Income Tax Loophole shenanigans committed by the Big Health Insurance Corps should be outraged. Things like this shouldn’t be allowed to happen.
In addition to these two giant corps, there are five other pretty large ones in this industry…CIGNA, Aetna, Humana, Coventry and Assurance.
In this study, I have dropped out Assurance because it decided to not disclose in its income tax footnotes in its annual reports filed with the SEC, the necessary state corporate income tax information…either its current state income tax paid or its state income tax element in its income tax rate reconciliation schedule.
Everyone is aware of how US Big Health Insurance Corps profits have gone to the moon in the 2000s Lost Decade. These six publicly-held health insurance corps generated Pretax Income in just 2009 of $19,114 mil, up an incredible 638% from the $2,591 mil earned a decade earlier, in 1999. Nearly all of these earnings were generated in the US.
But not everyone is aware of how these six Big Health Insurance Corps fared in helping their respective States solve their fiscal budget problems. Well, the record here flat out stinks.
For the last dozen years, these six corps paid an overall effective state corporate income tax rate of a dismal 2.43%, a 73% discount from the current 8.89% combined weighted statutory state corporate income tax rate of the six states these corps are located in.
The combined state corporate income tax loophole, due to the much lower state corporate income tax rate paid, was estimated to be an amazing $7.4 bil of state corporate income tax that was avoided by these six Big Health Insurance giants in the past dozen years. Man, these desperate States could certainly have used these massive amounts of lost funds.
…………………………………………….Effective
…………………..State………………....State…………......Current….State
……………………Tax…....Pretax……Tax….....SEC….Statutory...Tax
……………………Paid…..Income…..Rate…...State…….Tax….Loophole
…………………12 Years 1998-2009……....Location…Rate…..Amount
……………………...(mils of $s)………………………………..........(mils of $s)
UnitedHealth.1,014…..41,242…..2.46%.....MN…..9.80%.....3,028
WellPoint….......639….28,973…...2.21%.....IN…….8.50%.....1,824
Cigna………….....229…..16,190…...1.41%......PA…..9.99%......1,388
Aetna……….......462…..16,827…..2.75%.....CT…...7.50%........800
Humana……......205……6,099…..3.36%......KY…..6.00%........161
Coventry…….....237……5,175…..4.58%......MD….8.25%.........190
All Six Corps..2,786..114,506…..2.43%...All Six…8.89%.....7,391
It’s bad enough for Big Health Insurance companies to charge high premiums, to disallow so many insurance claims, and to be eventually getting the economic benefit of 30 million new insurance customers with the new Health Care Plan. But then for these Big Health Insurance giants to pile on by also taking advantage of many, massive State Corporate Income Tax Loopholes….that’s being clever by half.
The State Governors of MN, IN, PA, CT, KY, MD and other states should step up and correct this grossly unfair situation, which has so severely harmed many of their financially strapped State constituents.
And then just look at the below effective state corporate income tax rates paid by these Big Health Insurance Corps as compared with the top individual income tax rate in the same state:
.................................Corp Tax.......Top Individual
.................................Rate Paid.....Income Tax Rate
MN...UnitedHealth.......2.46%.............7.85%
IN...WellPoint..............2.21%..............3.40%
PA...Cigna....................1.41%...............3.07%
CT...Aetna...................2.75%..............6.50%
KY...Humana...............3.36%..............6.00%
MD...Coventry.............4.58%..............6.25%
I have to ask, how can it be fair for individuals in each of the above six states to be consistently paying such a substantially higher top individual income tax rate than the state corporate income tax rate these Big Health Insurance Corps HQed in their same state are paying? This comparative tax rate information has to make many people just furious!
Also, since US citizens are being hurt so severely by the actions of these Big Health Insurance giant corps, I think the Board of Directors of these Big Health Insurance Corps should be particularly vigilant in performing their required fiduciary responsibility of corporate oversight, and investigate the appropriateness of their Corps taking advantage of all of these many, massive amounts of State Corporate Income Tax Loopholes.
The many US citizens, in many States throughout the country, financially devastated by these Corporate State Income Tax Loophole shenanigans committed by the Big Health Insurance Corps should be outraged. Things like this shouldn’t be allowed to happen.
Friday, November 5, 2010
WellPoint and Eli Lilly, Indiana’s Two Giant Corps, Should Help State’s Citizens Get Out of Their Economic Holes
WellPoint and Eli Lilly, both Indianapolis based, dominate the corporate scene in Indiana.
In a previous post, I showed that Eli Lilly generated pretax earnings of $37 bil in the past 12 years, and paid no Indiana State Corporate Income Tax, even though Indiana has a current State Corporate Income Tax Rate of 8.5%. I’m not kidding. That’s just how crazy Indiana’s corporate income tax laws are.
Now, I’m adding the Big Health Insurance giant WellPoint to the mix. WellPoint generated $29 bil of pretax earnings in the past 11 years, all earned in the US. And WellPoint paid total state and local corporate income tax of only $639 mil in those same 11 years. Thus, WellPoint paid a meager effective state corporate income tax rate of 2.2%, which is a 74% discount from Indiana's corporate state income tax rate of 8.5%.
In my earlier post, I pointed out that if, for simplicity, I just use the current Indiana corporate income tax rate of a flat 8.5%, and multiply it by the $37.0 bil earned by Eli Lilly in the past 12 years, I get $3.1 bil of what could be considered a fair state corporate income tax Lilly should have paid.
In like manner, if I just use the current Indiana corporate income tax rate of a flat 8.5%, and multiply it by the $29.0 bil earned by WellPoint in the past 11 years, I get $2,463 mil of what could be considered a fair state corporate income tax WellPoint should have paid. And when I compare this $2,463 mil with the $639 mil WellPoint actually paid, I get a shortfall of an incredible $1,824 mil, or a shortfall of $1.8 bil.
To balance the Indiana State budget, instead of wisely correcting this massive State of Indiana corporate tax loophole problem, the Indiana State Government has instead decided to lay off all of these state employees, including many educators, and they have also raised tuition of Indiana’s public universities, and they have also squeezed the costs out of so many excellent State programs.. Give me a break! That makes no sense.
With some of these $4.9 bil of State Funds.....$1.8 bil of additional State funds related to WellPoint’s state corporate income tax loopholes and $3.1 bil related to Eli Lilly..... Indiana could do some really great things like giving very healthy tax incentives to small and medium-sized Indiana businesses in order to bring down the horribly high Indiana State Unemployment Rate, like reducing tuition at State Universities, like sprucing up both K-12 and higher public education even more with wise initiatives, like investing even more in our already strong, but clearly overstressed police and fire departments, like making some wise green energy investments, like reducing property and sales taxes, like reducing the State individual income tax rates, like reducing the 8.5% corporate state income tax rate, and still having enough left over to significantly enhance the State’s Rainy Day Fund.
I really can’t understand how the State of Indiana thinks that in balancing its budget, it is permissible to cut all of these key state jobs, like ones in the critical area of education, instead of closing all of these State Corporate Tax Loopholes that let’s big corporations like WellPoint pay such a meager amount of State Income Tax, and let's Lilly pay no State Income Tax, where at the same time, so many Indiana citizens are suffering so severely economically. That's just not right, and Indiana citizens have every right to be outraged.
When you think of all the state services provided to both WellPoint and to Lilly, to their Board of Directors, to their executives, and to all of their employees, like education, state protection, and many other key services, you have to wonder why both WellPoint and Lilly think it is perfectly OK to have to pay such meager amounts of corporate state income taxes to the State of Indiana for these very valuable services they have received. And it’s not just Lilly and WellPoint. Many large Multinational Corps all over the country are following Lilly and WellPoint’s state corporate income tax avoidance footsteps here.
From an extensive review of WellPoint’s past SEC annual report filings, on the very positive side, unless you were the one gorged by their high insurance premiums or by their disallowance of your insurance claims, here is WellPoint’s US pretax income by year, for the past eleven years:
All in millions of dollars
2009…..7,403
2008…..3,122
2007…..5,258
2006…..4,914
2005…..3,890
2004…..1,443
2003…..1,219
2002……..808
2001……..525
2000……..330
1999………...61
Total….28,973 (yeah, that $29 bil)
Whoa, now that is what I call nosebleed earnings growth.
And then on the really negative side, here's WellPoint’s total corporate state and local income tax paid (received) in each year, for the last eleven years, from its SEC income tax footnotes:
All in millions of dollars:
2009…..87
2008…126
2007…117
2006…134
2005…114
2004…..27
2003…..15
2002…..14
2001……8
2000……4
1999…..(7)
Total….639 (yeah, that’s $639 mil, or only a 2.2% current state and local effective income tax rate paid)
I have to believe that what happened here in Indiana with these two giant corps paying such minor amounts of State corporate income tax is mirrored all throughout the country.
US Citizens should be outraged with the way their States are giving their major corps the privilege of paying such minor amounts of corporate income tax, while so many State citizens and so many State small and medium-sized businesses are in such desperate financial shape.
What is particularly troubling to me is the whole-scale layoffs of state educators all throughout the country, while large Corps are permitted to take advantage of the many, huge State Corporate Tax Loopholes to avoid paying state taxes.
Increased Education Funding, very wisely spent, is the key to making US businesses competitive in the long run on the world scene. It is also one of the key ingredients to solving the long-term unemployment and underemployment crisis the country faces.
In a previous post, I showed that Eli Lilly generated pretax earnings of $37 bil in the past 12 years, and paid no Indiana State Corporate Income Tax, even though Indiana has a current State Corporate Income Tax Rate of 8.5%. I’m not kidding. That’s just how crazy Indiana’s corporate income tax laws are.
Now, I’m adding the Big Health Insurance giant WellPoint to the mix. WellPoint generated $29 bil of pretax earnings in the past 11 years, all earned in the US. And WellPoint paid total state and local corporate income tax of only $639 mil in those same 11 years. Thus, WellPoint paid a meager effective state corporate income tax rate of 2.2%, which is a 74% discount from Indiana's corporate state income tax rate of 8.5%.
In my earlier post, I pointed out that if, for simplicity, I just use the current Indiana corporate income tax rate of a flat 8.5%, and multiply it by the $37.0 bil earned by Eli Lilly in the past 12 years, I get $3.1 bil of what could be considered a fair state corporate income tax Lilly should have paid.
In like manner, if I just use the current Indiana corporate income tax rate of a flat 8.5%, and multiply it by the $29.0 bil earned by WellPoint in the past 11 years, I get $2,463 mil of what could be considered a fair state corporate income tax WellPoint should have paid. And when I compare this $2,463 mil with the $639 mil WellPoint actually paid, I get a shortfall of an incredible $1,824 mil, or a shortfall of $1.8 bil.
To balance the Indiana State budget, instead of wisely correcting this massive State of Indiana corporate tax loophole problem, the Indiana State Government has instead decided to lay off all of these state employees, including many educators, and they have also raised tuition of Indiana’s public universities, and they have also squeezed the costs out of so many excellent State programs.. Give me a break! That makes no sense.
With some of these $4.9 bil of State Funds.....$1.8 bil of additional State funds related to WellPoint’s state corporate income tax loopholes and $3.1 bil related to Eli Lilly..... Indiana could do some really great things like giving very healthy tax incentives to small and medium-sized Indiana businesses in order to bring down the horribly high Indiana State Unemployment Rate, like reducing tuition at State Universities, like sprucing up both K-12 and higher public education even more with wise initiatives, like investing even more in our already strong, but clearly overstressed police and fire departments, like making some wise green energy investments, like reducing property and sales taxes, like reducing the State individual income tax rates, like reducing the 8.5% corporate state income tax rate, and still having enough left over to significantly enhance the State’s Rainy Day Fund.
I really can’t understand how the State of Indiana thinks that in balancing its budget, it is permissible to cut all of these key state jobs, like ones in the critical area of education, instead of closing all of these State Corporate Tax Loopholes that let’s big corporations like WellPoint pay such a meager amount of State Income Tax, and let's Lilly pay no State Income Tax, where at the same time, so many Indiana citizens are suffering so severely economically. That's just not right, and Indiana citizens have every right to be outraged.
When you think of all the state services provided to both WellPoint and to Lilly, to their Board of Directors, to their executives, and to all of their employees, like education, state protection, and many other key services, you have to wonder why both WellPoint and Lilly think it is perfectly OK to have to pay such meager amounts of corporate state income taxes to the State of Indiana for these very valuable services they have received. And it’s not just Lilly and WellPoint. Many large Multinational Corps all over the country are following Lilly and WellPoint’s state corporate income tax avoidance footsteps here.
From an extensive review of WellPoint’s past SEC annual report filings, on the very positive side, unless you were the one gorged by their high insurance premiums or by their disallowance of your insurance claims, here is WellPoint’s US pretax income by year, for the past eleven years:
All in millions of dollars
2009…..7,403
2008…..3,122
2007…..5,258
2006…..4,914
2005…..3,890
2004…..1,443
2003…..1,219
2002……..808
2001……..525
2000……..330
1999………...61
Total….28,973 (yeah, that $29 bil)
Whoa, now that is what I call nosebleed earnings growth.
And then on the really negative side, here's WellPoint’s total corporate state and local income tax paid (received) in each year, for the last eleven years, from its SEC income tax footnotes:
All in millions of dollars:
2009…..87
2008…126
2007…117
2006…134
2005…114
2004…..27
2003…..15
2002…..14
2001……8
2000……4
1999…..(7)
Total….639 (yeah, that’s $639 mil, or only a 2.2% current state and local effective income tax rate paid)
I have to believe that what happened here in Indiana with these two giant corps paying such minor amounts of State corporate income tax is mirrored all throughout the country.
US Citizens should be outraged with the way their States are giving their major corps the privilege of paying such minor amounts of corporate income tax, while so many State citizens and so many State small and medium-sized businesses are in such desperate financial shape.
What is particularly troubling to me is the whole-scale layoffs of state educators all throughout the country, while large Corps are permitted to take advantage of the many, huge State Corporate Tax Loopholes to avoid paying state taxes.
Increased Education Funding, very wisely spent, is the key to making US businesses competitive in the long run on the world scene. It is also one of the key ingredients to solving the long-term unemployment and underemployment crisis the country faces.
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