In performing a quick review of SEC filings of large corps with an SEC State Location Code in Michigan, I found six corps with healthy State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years.
General Motors was excluded from this below list because of its huge pretax losses, which totaled $58.5 bil for the four years from 2005 to 2008. GMAC was also excluded, even though it registered total pretax profits of $24.8 bil in the years from 1998 to 2005, when it was 100% owned by GM. However, all of these GMAC profits were already included in GM’s total earnings. Since GM sold 51% of GMAC in November 2006, GMAC has generated pretty hefty aggregate losses.
Ford was included in the below list, even though it generated $33.4 bil of pretax losses in the three years from 2006 to 2008. Ford more than made up for those losses, when in the three years from 1998 to 2000 (ahh, those Clinton Economic years), Ford registered pretax profits totaling $42.4 bil. In those same three Clinton years, even General Motors generated pretax profits, which totalled $21.1 bil.
The many publicly-held auto suppliers in Michigan were also excluded from the list. Nearly all of them generated substantial losses. More on that later.
DTE Energy generated Total Pretax Income of $7,089 mil for the past 12 years. It was excluded from the below list of Michigan Big Corps since it did not disclose its State Corporate Income Tax Paid in all 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 Big Michigan Corps. These six Big Michigan Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.15%. This is substantially below Michigan’s current state corporate income tax rate that starts at 4.95% of income, but then added to this 4.95% tax rate is the lesser of $6 mil or of another 22% of 4.95% of income, or an additional 1.09%.
….……………………...............Current…………………..........State
….…………………….................State.....Consolidated....Effective
….…………………….................Tax………...Pretax………..Tax Rate
….…………………….................Paid……....Income………...Paid
….……………….…...................(Millions of Dollars)
..6. Masco...........................366……......9,593…….......3.82%
..5. Stryker….......................265............9,333.…........2.84%
..4. Kellogg……………….........338…….....14,419…….......2.34%
..3. Whirlpool……................116.............6,071….........1.91%
..2. Ford…...........................210……....12,078…..........1.74%
..1. Dow Chemical...............422…….....28,200…….......1.50%
Total all 6………...............1,717…........79,694…….......2.15%
I think it makes much more sense to balance a State’s budget by closing some of the Big Corp State Corporate Income Tax Loopholes, rather than by significantly reducing critical state services like education and citizen protection.
But also, I think it makes sense to use some of the funds from the closing of these Michigan Big Corp State Income Tax Loopholes to provide some wise, highly stimulative, job-creating tax incentives to small and medium-sized businesses, and particularly ones targeted at the severely depressed auto supplier industry.
After reviewing tons of the SEC filings of Michigan auto suppliers, with substantial losses after losses, years on end, it is pretty clear to me why there was such widespread dissatisfaction with both the Federal and State Governments, as shown in the recent November 2010 election.
What the Obama Administration did to prop up General Motors was absolutely necessary, or else the country’s unemployment rates would have increased substantially, and particularly so in states with a heavy automobile and automobile supplier industry like Michigan. And for many US citizens to now be so visibly upset that the recent General Motors IPO was successful is frankly unpatriotic.
But the problem in the US auto industry is much too severe to be solved by a somewhat rejuvenated General Motors, which was revived from the ashes. What I think is needed are substantial smartly-designed business tax incentives to help rescue all of these auto suppliers, who are now on life support. Their losses have just been so substantial, and for so many years, while the Government just ignored this massive problem.
I would prefer seeing something like the investment tax credit, but with a bonus percentage in very hard hit areas of the country like Detroit, and some other parts of Michigan. And other places hit hard by offshoring of manufacturing jobs should also get the benefit of a bonus investment tax credit. And places like New Orleans, ravished by both Katrina and the BP oil spill, should get this bonus investment tax credit, as well.
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 Michigan. I wouldn't give the bonus investment tax credit percentage to huge companies.
A healthy business research tax credit program is also needed for Michigan. There are all of these very bright, innovative people connected with the second best public research university in the world, the University of Michigan….second only to Cal-Berkeley…..and somehow this Wolverine think tank should be better utilized to foster Michigan’s economic recovery. There should be some strong government incentives to make this happen.
And until this happens, I can’t understand why elected members of the US House and the US Senate are being so mean-spirited with some of these many unemployed by cutting off their unemployment compensation benefits. It’s not the fault of the Michigan unemployed that the US auto industry went down the tubes. It’s really the fault of many in the laissez-faire US government who ignored this problem for so many years. And at the same time, these same US politicians were fostering the offshoring of Michigan manufacturing jobs, which added substantial amounts of kindling to this ravishing fire.
And the hypocrisy of voting down unemployment benefits under the pretense of Deficit Reduction! Just looking at a couple of the Dow Industrials, these same US politicians strongly support measures that permitted:
…..Exxon Mobil to pay no federal income taxes in 2009, instead letting them get a federal income tax refund of more than $800 mil, when in the same year, Exxon Mobil earned consolidated pretax income of more than $35 bil.
….. Verizon Communiations to pay no federal income taxes in 2009, instead letting them get a federal income tax refund of more than $600 mil, when in the same year, Verizon earned pretax income of more than $11 bil.
….. Merck to pay no federal income taxes in 2009, when in the same year, it earned consolidated pretax income of more than $15 bil.
…..GE to pay no federal income taxes in 2009, instead letting them get a federal income tax refund of more than $800 mil, when in the same year, GE earned consolidated pretax income of more than $10 bil.
…..GE to pay no federal income taxes in 2008, instead letting them get a federal income tax refund of more than $700 mil, when in the same year, GE earned consolidated pretax income of more than $19 bil.
…..GE to pay no federal income taxes in total for the four years 2006 through 2009, instead letting them get a federal income tax refund of more than $1.5 bil, when in those same four years, GE earned consolidated pretax income of more than $82 bil.
And further, these same US politicians protect the so many, huge Big Corp federal and state corporate income tax loopholes. By closing many of these tax loopholes, both the US and State Budgets would be substantially strengthened.
Also, these same US politicians, and even including some Democrats, are trying to pass all of these annual Tax Extenders, clearly being lobbied by special interest groups to do so. And what is their proposal to pay for this massive cost? Well, it is not paid for, instead their proposal is to increase the US Deficit. They won't extend unemployment compensation for the unfortunate because it increases the US Deficit. But they will pass Tax Extenders for Corporate special interests, and for the wealthy, without paying for it. These mean-spirited politicians must get called out, and even better yet, must be voted out of office.
And now these same US politicians want to reduce the top individual income tax rates, which would benefit the very wealthy to the tune of $700 bil over the next ten years, which would also, at the same time, substantially increase the US Deficit. So the logic here is that it is OK to increase the US Deficit for tax cuts for the rich, who don't need the money, but it is not OK to increase the US Deficit for paying for unemployment benefits for the poor, who desperately need the money to survive? Give me a break! What kind of a society have we become?
And then lastly, from a fairness standpoint, the above weighted average effective Michigan Corporate State Income Tax Rates Paid by these six Big Corps in the past twelve years of 2.15% is low in comparison with Michigan’s current individual income tax rate of 4.35%.
Friday, November 19, 2010
Thursday, November 18, 2010
Wisconsin 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 Wisconsin, I found six corps with healthy State Corporate Income Tax Loopholes Taken, at least the way I measure them, in the last dozen years. Marshall & Ilsley was excluded because it experienced huge losses in the most recent two years. In like manner, MGIC Investment Corp was excluded since it had large losses in each of the past three years. Fiserv generated Total Pretax Income of $6,237 mil for the past 12 years, but wasn't included in the below list of Wisconsin Big Corps, since its estimated State Corporate Income Tax Loopholes Taken were below $200 mil.
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 Wisconsin Corps. These six larger Wisconsin Corps below had a weighted average state corporate effective income tax rate paid of a modest 2.79%, or a 65% discount to Wisconsin’s current state corporate income tax rate of 7.90%.
….……………………...............Current…………………..........State
….…………………….................State.....Consolidated....Effective
….…………………….................Tax………...Pretax………..Tax Rate
….…………………….................Paid……....Income………...Paid
….……………….…...................(Millions of Dollars)
..6. Kohl’s............................497…….....13,133…….....3.78%
..5. Harley Davidson….........364...........11,215.….......3.25%
..4. Johnson Controls………..350…….....11,069…….....3.16%
..3. Associated Banc………......52............3,215….........1.62%
..2. Manpower…....................47…….......3,631…........1.29%
..1. Rockwell Automation......34…….......5,860…….....0.58%
Total all 6……….................1,344…........48,123…….....2.79%
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.
After reviewing the SEC filings of Wisconsin manufacturing company after manufacturing company, it is pretty clear to me why there was such widespread dissatisfaction with both the Federal and State Government, as shown in the recent November 2010 election. Either nobody in government is listening to these many manufacturing people in the State of Wisconsin, or even worse, they are listening but the Government just isn't able to execute. Wisconsin has all of this incredible manufacturing 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 more importantly, it also needs to be unleashed to bring the country out of its horrible jobless recovery. Principally the US government, but also the State Government, need to create the strong stimulative environment to permit these many Wisconsin manufacturing companies to thrive. Clearly, smart business tax incentives are needed here, like investment tax credits, research tax credits, and jobs tax credits.
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 Wisconsin. I wouldn't give the bonus investment tax credit percentage to huge companies.
And then lastly, from a fairness standpoint, the above weighted average effective Wisconsin Corporate State Income Tax Rates Paid by these six larger Corps in the past twelve years of 2.79% is very low in comparison with Wisconsin’s current individual income tax rate of 6.5% on income above $20,500 and up to $153,280.
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 Wisconsin Corps. These six larger Wisconsin Corps below had a weighted average state corporate effective income tax rate paid of a modest 2.79%, or a 65% discount to Wisconsin’s current state corporate income tax rate of 7.90%.
….……………………...............Current…………………..........State
….…………………….................State.....Consolidated....Effective
….…………………….................Tax………...Pretax………..Tax Rate
….…………………….................Paid……....Income………...Paid
….……………….…...................(Millions of Dollars)
..6. Kohl’s............................497…….....13,133…….....3.78%
..5. Harley Davidson….........364...........11,215.….......3.25%
..4. Johnson Controls………..350…….....11,069…….....3.16%
..3. Associated Banc………......52............3,215….........1.62%
..2. Manpower…....................47…….......3,631…........1.29%
..1. Rockwell Automation......34…….......5,860…….....0.58%
Total all 6……….................1,344…........48,123…….....2.79%
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.
After reviewing the SEC filings of Wisconsin manufacturing company after manufacturing company, it is pretty clear to me why there was such widespread dissatisfaction with both the Federal and State Government, as shown in the recent November 2010 election. Either nobody in government is listening to these many manufacturing people in the State of Wisconsin, or even worse, they are listening but the Government just isn't able to execute. Wisconsin has all of this incredible manufacturing 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 more importantly, it also needs to be unleashed to bring the country out of its horrible jobless recovery. Principally the US government, but also the State Government, need to create the strong stimulative environment to permit these many Wisconsin manufacturing companies to thrive. Clearly, smart business tax incentives are needed here, like investment tax credits, research tax credits, and jobs tax credits.
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 Wisconsin. I wouldn't give the bonus investment tax credit percentage to huge companies.
And then lastly, from a fairness standpoint, the above weighted average effective Wisconsin Corporate State Income Tax Rates Paid by these six larger Corps in the past twelve years of 2.79% is very low in comparison with Wisconsin’s current individual income tax rate of 6.5% on income above $20,500 and up to $153,280.
Wednesday, November 17, 2010
New York 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 New York, I found 30 New York Corps with State Corporate Income Tax Loopholes Taken, at least the way I measure them, of at least $300 mil each, in the last dozen years. I excluded two large companies which Fortune Magazine says are headquartered in New York (Alcoa and Travelers), because their SEC State Location Codes were in Pennsylvania and Minnesota, respectively.
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 exclusive of huge Asset Impairment Charges, both in total for the past twelve years for each of these 30 Big New York Corps. These 30 Big New York Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.52%, or a 65% discount to New York’s current state corporate income tax rate of 7.10%. This discount would be even significantly higher if the New York City Statutory Corporate Income Tax rate were added to the 7.10% New York State Corporate Income Tax Rate. Many of these 30 huge New York Corps are headquartered in New York City.
….……………………...................Current…………………......State
….…………………….....................State..Consolidated..Effective
….…………………….....................Tax……….Pretax………...Tax
….…………………….....................Paid……..Income……….Rate
….……………….….....................(Millions of Dollars)
30. Bank of New York Mellon..1,183……..21,569……..5.48%
29. Marsh & McLennan……….....628……..13,961……..4.50%
28. Loews……………….................849.…….18,971……..4.48%
27. Time Warner....................1,237........28,134........4.40%
26. Time Warner Cable.............445........10,558........4.21%
25. Verizon Communications.3,372……133,814……..4.01%
24. Morgan Stanley………….....2,652…….67,759……..3.91%
23. JP Morgan Chase………......4,289…...121,908……..3.52%
22. Altria Group…………….......4,371…...143,203……..3.05%
21. Citigroup….......................4,081…...140,068……..2.91%
20. Goldman Sachs…………......2,553…….96,605……..2.82%
19. News Corp…………….............577…….22,798……..2.53%
18. American Express…………....990….....45,364……..2.18%
17. Pepsi Bottling………..............131….......6,650……..1.97%
16. M&T Bank………...................175…….....8,962……..1.95%
15. Estee Lauder……..................128….......6,662……..1.92%
14. Omnicom Group……………....248….....13,525....….1.83%
13. Consolidated Edison………….242….....13,344……..1.81%
12. Pfizer……..........................1,920…...109,196……..1.76%
11. Forest Labs………..................136……....8,691……..1.59%
10. Dover……………......................92……....6,493……..1.42%
..9. PepsiCo…………....................868……..63,882……..1.36%
..8. Colgate-Palmolive…............286*……24,982……..1.14%
..7. MetLife...............................309……..28,117……..1.10%
..6. IBM..................................1,510……147,733……..1.02%
..5. Bristol Myers Squibb...........392*……48,462……..0.81%
..4. Avon Products…………...........66……..10,150……..0.65%
..3. ITT……...................................16……….6,779……..0.24%
..2. Phillip Morris International..(15)…….28,064…….(0.05)%
..1. Hess………............................(123)…….21,762…….(0.57)%
Total all 30………....................35,610…1,412,166…….2.52%
* For both Colgate-Palmolive and Bristol Myers Squibb, the above State Corporate Income Tax Paid amounts also include Deferred Income Tax Expense. These two companies decided to not disclose the amount of their State Income Tax Paid, which should be markedly lower than the above combined amounts shown.
For the most recent 2009 year, the weighted state corporate effective income tax rate paid by these Big New York Corps was an even lower 2.13%.
Health Insurance company Assurant generated Total Pretax Income of $5,407 mil in the past 9 years. It was excluded from the above list of New York Big Corps because it didn't disclose its State Income Tax Paid in the most recent three years.
Nine Corps were excluded from the above list of New York Big Corps, even though they generated Total Pretax Income for the past 12 years of more than $5 bil. These nine Corps were excluded because their Total State Corporate Income Tax Loopholes Taken were less than $300 mil each. These nine Corps were CBS, Viacom, McGraw-Hill, Moody's, L-3 Communications, Paychex, Coach, Blackrock, and Eastman Kodak.
I find that by listening to Alicia Keys' Empire State of Mind while reviewing all of these New York numbers…..that the statistics start jumping off the computer screen and start talking to me. Here’s very briefly what they are saying:
…..For a Big Oil company like Hess to be paying no state corporate income taxes in the past 12 years, and instead getting $123 mil in State Corporate income tax refunds, is flat out wrong. I need to later do a more in-depth study of all of Big Oil and its related role in helping (?) US States all over the country get out their horrible fiscal jams.
…..For Phillip Morris International to be paying no state corporate income taxes since it was spun off from the Altria Group is also flat out wrong. So US States reward the company that is exporting overseas all of these health problems caused by their cigarettes?
…..After reviewing hundreds of large companies, the only other highly profitable US Corp that has not paid any State Corporate Income Tax in the past 12 years, and instead got State tax refunds, is Indianapolis-based Eli Lilly.
…..Just like New Jersey Big Pharma, New York’s two Big Pharma (Pfizer and Bristol Myers Squibb) also all have incredibly low state effective corporate income tax rates paid. Big Pharma's shifting of its income overseas has not just hurt the US Government financial coffers, but it also has severely damaged the financial status of US States.
.....I have a gut feeling that in all fairness, many US States should be getting a lot more in State Corporate Income Taxes from New York Big Corps, and frankly from Big Corps of other US States, as well. New York, with its many exceptionally bright, greedy, shady and reckless financial wizards, was a major cause of the country’s severe financial crisis. It only makes sense to me this same kind of financial recklessness also infiltrated the State Corporate Income Tax planning ranks, with the myriad of creative tax loopholes designed by some really bright financial minds. But this was all orchestrated to the severe detriment of both State Government financial coffers and State citizens, many of whom are financially desperate.
…..I think it is high time for New York Big Corps, and all Big Corps all throughout the country, to step up and help US States get out of their horrible financial messes. Big Corps, their stockholders, their bondholders, their Boards of Directors, their executives, and their employees are all getting so many advantages from critical services provided by State and Local Governments, and it is only right that these Big Corps pay a fair amount of State Corporate Income Taxes for these services.
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 30 Big New York 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 York Corporate Income Tax Rate of 7.10% by the total Consolidated Pretax Income of each Big New York 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. I have excluded from the 7.10% NY Statutory Corporate Income Tax Rate, the NY City Corporate Income Tax Rate. If this NY City Corporate Income Tax Rates were included, the amounts of total New York Corporate Income Tax Loopholes Taken would be substantially higher than what is shown below. Many of these Big New York Corps are headquartered in New York City.
……………………….........................NY…..........State……....Resultant
………………….........…..............Corporate…...Effective.......Higher
………………….........…………..........Tax…….....Tax Rate…....State Tax
………………..........…………...........Rate……........Paid…...Last 12 Years
…………………………………………………....................(Millions of dollars)
..1. IBM………….......…………….....7.10%..........1.02%...........8,979
..2. Citigroup………….........………7.10%..........2.91%............5,864
..3. Pfizer……………...........……....7.10%..........1.76%............5,833
..4. Altria Group......……….........7.10%..........3.05%............5,796
..5. JP Morgan Chase…………......7.10%..........3.52%............4,366
..6. Verizon Communications…..7.10%..........4.01%...........4,129
..7. Goldman Sachs…….......……..7.10%..........2.82%...........3,880
..8. PepsiCo…………......………......7.10%..........1.36%...........3,668
..9. Bristol Myers Squibb………...7.10%..........0.81%...........3,049
10. American Express……………..7.10%..........2.18%...........2,231
11. Morgan Stanley……........…….7.10%..........3.91%...........2,159
12. Phillip Morris International.7.10%........(0.05)%..........2,008
13. MetLife………………………….....7.10%..........1.10%...........1,687
14. Hess…………………………….......7.10%........(0.57)%..........1,668
15. Colgate-Palmolive…………......7.10%.........1.14%............1,488
16. News Corp………….......………..7.10%.........2.53%............1,042
17. Time Warner........................7.10%..........4.40%..............761
18. Omnicom Group…......………..7.10%.........1.83%...............712
19. Consolidated Edison……….....7.10%.........1.81%...............705
20. Avon Products……………….....7.10%.........0.65%..............655
21. Loews…………......……………...7.10%..........4.48%..............498
22. Forest Labs………….....………..7.10%..........1.59%..............479
23. ITT……………………………........7.10%..........0.24%.............465
24. M&T Bank…………………….......7.10%.........1.95%..............461
25. Dover………………………….......7.10%..........1.42%.............369
26. Marsh & McLennan…………....7.10%.........4.50%.............363
27. Bank of New York Mellon…...7.10%.........5.48%.............348
28. Estee Lauder……………………..7.10%….......1.92%.............345
29. Pepsi Bottling…………………....7.10%..........1.97%.............341
30. Time Warner Cable...............7.10%.........4.21%.............305
Total all 30………………………………………64,654 (yeah, $64.7 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken by these 30 New York Big Corps was $37.6 bil, as compared to $64.7 bil for the past twelve years.
I think it would be helpful to focus on the four huge New York financial corps severely impacted by the financial crisis, and specifically on the period of time before the financial meltdown in 2008. Thus, below here is some key information related to these four firms for the ten-year period from the beginning of 1998 to the end of 2007.
…………………………...............Consolidated…...Effective…..Estimated
…………….........State Corp..…....Pretax……....State Corp…..State Tax
……………….......Tax Paid……....Income……....Tax Rate…...Loophole
…………………………………………….......................Paid………...Taken
…………………………...........10 Years 1998-2007………………............
………………...........(Millions of dollars)……………...........(mils of $s)
Citigroup………...4,466…….....200,222……......2.23%..........9,750
AIG…………….........436*……....112,206…….....0.39%...........7,531
Merrill Lynch……..630…….......33,488……......1.88%...........1,748
Lehman Bros......1,283…….......31,210……......4.11%..............933
Totals………….....6,815….........377,126…….....1.81%..........19,961
*AIG includes both Current and Deferred State Corporate Income Tax combined
Just looking at the above list, I suggest that the rampant financial creativity here doesn’t just happen on a pretax basis. And in the Corporate Income Tax area, it just doesn't happen with Federal Income Taxes.
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, I think it makes sense to use some of the funds from the closing of these Big Corp State Income Tax Loopholes to provide some wise, highly stimulative, directly-targeted, job-creating tax incentives to small and medium-sized businesses. By far the most effective way to reduce a State’s deficit in the long run is to improve significantly State long-term real economic growth, along with the carefully crafted resultant substantial reduction in State unemployment and underemployment rates.
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.
Also, from a fairness standpoint, the above effective New York Corporate State Effective Income Tax Rates Paid by these 30 Big Corps are very low in comparison with New York State’s current individual income tax rates, which for income amounts above $20,000 and up to $200,000, is a substantially higher 6.85%, and then there’s New York City individual income tax, to boot. Granted the stated New York Corporate State Income Tax Rate is a much closer 7.10%, but the state corporate income tax rate actually paid by these Big New York Corps averaged only 2.13% in the most recent year. That substantial tax rate paid variance between New York Big Corps and New York individuals just doesn’t make any sense to me.
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 exclusive of huge Asset Impairment Charges, both in total for the past twelve years for each of these 30 Big New York Corps. These 30 Big New York Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.52%, or a 65% discount to New York’s current state corporate income tax rate of 7.10%. This discount would be even significantly higher if the New York City Statutory Corporate Income Tax rate were added to the 7.10% New York State Corporate Income Tax Rate. Many of these 30 huge New York Corps are headquartered in New York City.
….……………………...................Current…………………......State
….…………………….....................State..Consolidated..Effective
….…………………….....................Tax……….Pretax………...Tax
….…………………….....................Paid……..Income……….Rate
….……………….….....................(Millions of Dollars)
30. Bank of New York Mellon..1,183……..21,569……..5.48%
29. Marsh & McLennan……….....628……..13,961……..4.50%
28. Loews……………….................849.…….18,971……..4.48%
27. Time Warner....................1,237........28,134........4.40%
26. Time Warner Cable.............445........10,558........4.21%
25. Verizon Communications.3,372……133,814……..4.01%
24. Morgan Stanley………….....2,652…….67,759……..3.91%
23. JP Morgan Chase………......4,289…...121,908……..3.52%
22. Altria Group…………….......4,371…...143,203……..3.05%
21. Citigroup….......................4,081…...140,068……..2.91%
20. Goldman Sachs…………......2,553…….96,605……..2.82%
19. News Corp…………….............577…….22,798……..2.53%
18. American Express…………....990….....45,364……..2.18%
17. Pepsi Bottling………..............131….......6,650……..1.97%
16. M&T Bank………...................175…….....8,962……..1.95%
15. Estee Lauder……..................128….......6,662……..1.92%
14. Omnicom Group……………....248….....13,525....….1.83%
13. Consolidated Edison………….242….....13,344……..1.81%
12. Pfizer……..........................1,920…...109,196……..1.76%
11. Forest Labs………..................136……....8,691……..1.59%
10. Dover……………......................92……....6,493……..1.42%
..9. PepsiCo…………....................868……..63,882……..1.36%
..8. Colgate-Palmolive…............286*……24,982……..1.14%
..7. MetLife...............................309……..28,117……..1.10%
..6. IBM..................................1,510……147,733……..1.02%
..5. Bristol Myers Squibb...........392*……48,462……..0.81%
..4. Avon Products…………...........66……..10,150……..0.65%
..3. ITT……...................................16……….6,779……..0.24%
..2. Phillip Morris International..(15)…….28,064…….(0.05)%
..1. Hess………............................(123)…….21,762…….(0.57)%
Total all 30………....................35,610…1,412,166…….2.52%
* For both Colgate-Palmolive and Bristol Myers Squibb, the above State Corporate Income Tax Paid amounts also include Deferred Income Tax Expense. These two companies decided to not disclose the amount of their State Income Tax Paid, which should be markedly lower than the above combined amounts shown.
For the most recent 2009 year, the weighted state corporate effective income tax rate paid by these Big New York Corps was an even lower 2.13%.
Health Insurance company Assurant generated Total Pretax Income of $5,407 mil in the past 9 years. It was excluded from the above list of New York Big Corps because it didn't disclose its State Income Tax Paid in the most recent three years.
Nine Corps were excluded from the above list of New York Big Corps, even though they generated Total Pretax Income for the past 12 years of more than $5 bil. These nine Corps were excluded because their Total State Corporate Income Tax Loopholes Taken were less than $300 mil each. These nine Corps were CBS, Viacom, McGraw-Hill, Moody's, L-3 Communications, Paychex, Coach, Blackrock, and Eastman Kodak.
I find that by listening to Alicia Keys' Empire State of Mind while reviewing all of these New York numbers…..that the statistics start jumping off the computer screen and start talking to me. Here’s very briefly what they are saying:
…..For a Big Oil company like Hess to be paying no state corporate income taxes in the past 12 years, and instead getting $123 mil in State Corporate income tax refunds, is flat out wrong. I need to later do a more in-depth study of all of Big Oil and its related role in helping (?) US States all over the country get out their horrible fiscal jams.
…..For Phillip Morris International to be paying no state corporate income taxes since it was spun off from the Altria Group is also flat out wrong. So US States reward the company that is exporting overseas all of these health problems caused by their cigarettes?
…..After reviewing hundreds of large companies, the only other highly profitable US Corp that has not paid any State Corporate Income Tax in the past 12 years, and instead got State tax refunds, is Indianapolis-based Eli Lilly.
…..Just like New Jersey Big Pharma, New York’s two Big Pharma (Pfizer and Bristol Myers Squibb) also all have incredibly low state effective corporate income tax rates paid. Big Pharma's shifting of its income overseas has not just hurt the US Government financial coffers, but it also has severely damaged the financial status of US States.
.....I have a gut feeling that in all fairness, many US States should be getting a lot more in State Corporate Income Taxes from New York Big Corps, and frankly from Big Corps of other US States, as well. New York, with its many exceptionally bright, greedy, shady and reckless financial wizards, was a major cause of the country’s severe financial crisis. It only makes sense to me this same kind of financial recklessness also infiltrated the State Corporate Income Tax planning ranks, with the myriad of creative tax loopholes designed by some really bright financial minds. But this was all orchestrated to the severe detriment of both State Government financial coffers and State citizens, many of whom are financially desperate.
…..I think it is high time for New York Big Corps, and all Big Corps all throughout the country, to step up and help US States get out of their horrible financial messes. Big Corps, their stockholders, their bondholders, their Boards of Directors, their executives, and their employees are all getting so many advantages from critical services provided by State and Local Governments, and it is only right that these Big Corps pay a fair amount of State Corporate Income Taxes for these services.
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 30 Big New York 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 York Corporate Income Tax Rate of 7.10% by the total Consolidated Pretax Income of each Big New York 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. I have excluded from the 7.10% NY Statutory Corporate Income Tax Rate, the NY City Corporate Income Tax Rate. If this NY City Corporate Income Tax Rates were included, the amounts of total New York Corporate Income Tax Loopholes Taken would be substantially higher than what is shown below. Many of these Big New York Corps are headquartered in New York City.
……………………….........................NY…..........State……....Resultant
………………….........…..............Corporate…...Effective.......Higher
………………….........…………..........Tax…….....Tax Rate…....State Tax
………………..........…………...........Rate……........Paid…...Last 12 Years
…………………………………………………....................(Millions of dollars)
..1. IBM………….......…………….....7.10%..........1.02%...........8,979
..2. Citigroup………….........………7.10%..........2.91%............5,864
..3. Pfizer……………...........……....7.10%..........1.76%............5,833
..4. Altria Group......……….........7.10%..........3.05%............5,796
..5. JP Morgan Chase…………......7.10%..........3.52%............4,366
..6. Verizon Communications…..7.10%..........4.01%...........4,129
..7. Goldman Sachs…….......……..7.10%..........2.82%...........3,880
..8. PepsiCo…………......………......7.10%..........1.36%...........3,668
..9. Bristol Myers Squibb………...7.10%..........0.81%...........3,049
10. American Express……………..7.10%..........2.18%...........2,231
11. Morgan Stanley……........…….7.10%..........3.91%...........2,159
12. Phillip Morris International.7.10%........(0.05)%..........2,008
13. MetLife………………………….....7.10%..........1.10%...........1,687
14. Hess…………………………….......7.10%........(0.57)%..........1,668
15. Colgate-Palmolive…………......7.10%.........1.14%............1,488
16. News Corp………….......………..7.10%.........2.53%............1,042
17. Time Warner........................7.10%..........4.40%..............761
18. Omnicom Group…......………..7.10%.........1.83%...............712
19. Consolidated Edison……….....7.10%.........1.81%...............705
20. Avon Products……………….....7.10%.........0.65%..............655
21. Loews…………......……………...7.10%..........4.48%..............498
22. Forest Labs………….....………..7.10%..........1.59%..............479
23. ITT……………………………........7.10%..........0.24%.............465
24. M&T Bank…………………….......7.10%.........1.95%..............461
25. Dover………………………….......7.10%..........1.42%.............369
26. Marsh & McLennan…………....7.10%.........4.50%.............363
27. Bank of New York Mellon…...7.10%.........5.48%.............348
28. Estee Lauder……………………..7.10%….......1.92%.............345
29. Pepsi Bottling…………………....7.10%..........1.97%.............341
30. Time Warner Cable...............7.10%.........4.21%.............305
Total all 30………………………………………64,654 (yeah, $64.7 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken by these 30 New York Big Corps was $37.6 bil, as compared to $64.7 bil for the past twelve years.
I think it would be helpful to focus on the four huge New York financial corps severely impacted by the financial crisis, and specifically on the period of time before the financial meltdown in 2008. Thus, below here is some key information related to these four firms for the ten-year period from the beginning of 1998 to the end of 2007.
…………………………...............Consolidated…...Effective…..Estimated
…………….........State Corp..…....Pretax……....State Corp…..State Tax
……………….......Tax Paid……....Income……....Tax Rate…...Loophole
…………………………………………….......................Paid………...Taken
…………………………...........10 Years 1998-2007………………............
………………...........(Millions of dollars)……………...........(mils of $s)
Citigroup………...4,466…….....200,222……......2.23%..........9,750
AIG…………….........436*……....112,206…….....0.39%...........7,531
Merrill Lynch……..630…….......33,488……......1.88%...........1,748
Lehman Bros......1,283…….......31,210……......4.11%..............933
Totals………….....6,815….........377,126…….....1.81%..........19,961
*AIG includes both Current and Deferred State Corporate Income Tax combined
Just looking at the above list, I suggest that the rampant financial creativity here doesn’t just happen on a pretax basis. And in the Corporate Income Tax area, it just doesn't happen with Federal Income Taxes.
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, I think it makes sense to use some of the funds from the closing of these Big Corp State Income Tax Loopholes to provide some wise, highly stimulative, directly-targeted, job-creating tax incentives to small and medium-sized businesses. By far the most effective way to reduce a State’s deficit in the long run is to improve significantly State long-term real economic growth, along with the carefully crafted resultant substantial reduction in State unemployment and underemployment rates.
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.
Also, from a fairness standpoint, the above effective New York Corporate State Effective Income Tax Rates Paid by these 30 Big Corps are very low in comparison with New York State’s current individual income tax rates, which for income amounts above $20,000 and up to $200,000, is a substantially higher 6.85%, and then there’s New York City individual income tax, to boot. Granted the stated New York Corporate State Income Tax Rate is a much closer 7.10%, but the state corporate income tax rate actually paid by these Big New York Corps averaged only 2.13% in the most recent year. That substantial tax rate paid variance between New York Big Corps and New York individuals just doesn’t make any sense to me.
Update on California Big Corps Have Paid Modest Amounts of State Corporate Income Taxes
To be consistent with the way I will be presenting New York Big Corps a bit later, I am updating my earlier post on California Big Corps to include all California-based companies, 32 in total, where the State Corporate Income Tax Loopholes Taken was at least $300 mil each, at least the way I measure them, in the most recent 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 32 Big California Corps. These 32 Big California Corps below had a weighted average state corporate effective income tax rate paid for the past twelve years of a modest 2.61%, or a 70% 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)
32. Google…………....1,685…….27,244……..6.18%
31. Charles Schwab….719……..12,329……..5.83%
30. Gilead Sciences….529……....9,385……..5.64%
29. PG&E………………...960…….17,050……..5.63%
28. Safeway……………..676……..12,545……..5.39%
27. Visa......................531.......10,120........5.25%
26. Golden West Fincl.596……..11,552……..5.16%
25. Ebay……………….....583…….11,369……..5.13%
24. GAP………………......701…….16,945……..4.14%
23. Sempra Energy…...484…….12,209……..3.96%
22. Disney………….....1,864……47,950……..3.89%
21. Clorox…………….....297………8,296……..3.58%
20. Cisco Systems…..2,582…....72,442…….3.56%
19. Oracle………........2,303…....65,612……..3.51%
18. Apple……….........1,784…….51,465……...3.47%
17. Qualcomm…….......776…....25,105……..3.09%
16. Countrywide Fincl..515…....18,595....….2.77%
15. Franklin Resources.390…...14,140……..2.76%
14. Wells Fargo……....2,461…..108,550……..2.27%
13. Maxim Intgrtd Prds114.........5,442.......2.09%
12. Amgen………...........728…….34,933……..2.08%
11. Intel…………….......1,981…..101,986……..1.94%
10. Linear Technology.104.........5,562.......1.87%
..9. Chevron…………...3,057…..211,552……..1.45%
..8. Oxy Petroleum….....731…….55,238……..1.32%
..7. Adobe Systems.........82……...6,741……..1.22%
..6. Applied Materials....151…….14,654……..1.03%
..5. Hewlett-Packard.....642…….66,446……..0.97%
..4. McKesson…………......83………9,448……..0.88%
..3. Mattel……..................52………6,529…….0.80%
..2. DIRECTV…………….....25………4,914……..0.51%
..1. Western Digital………....4………3,515……..0.11%
Total all 32………......28,190…1,079,863…….2.61%
For the most recent 2009 year, the weighted state corporate effective income tax rate paid by these Big California Corps was an even lower 2.13%.
The huge Northrop Grumman was not included above, even though it generated a massive $15.6 bil of pretax income in the past twelve years. Northrop Grumman did not disclose the amounts of state income tax it paid. It passes on these costs to the US Government in its federal contracts.
Edison Intl, Yahoo, Intuit, Symantec, and First American all generated Total Pretax Income above $5 bil in the past 12 years. They were not included in the above list of Big Corps since their Total State Corporate Income Tax Loopholes Taken were lower than $300 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 32 Big California 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 California Corporate Income Tax Rate of 8.84% by the total Consolidated Pretax Income of each Big California 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.
………………………..........................CA……......State…….Resultant
………………….........…..............Corporate…Effective.......Higher
………………….........…………..........Tax……..Tax Rate…...State Tax
………………..........…………............Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
..1. Chevron………….......………….8.84%.......1.45%........15,644
..2. Wells Fargo………….........……8.84%......2.27%.........7,135
..3. Intel……………...........……......8.84%......1.94%.........7,035
..4. Hewlett-Packard......………...8.84%.......0.97%.........5,232
..5. Oxy Petroleum……………......8.84%.......1.32%..........4,152
..6. Cisco Systems………..………...8.84%.......3.56%..........3,822
..7. Oracle……………….......……....8.84%.......3.51%..........3,497
..8. Apple………………......………...8.84%.......3.47%..........2,766
..9. Disney………………………….....8.84%.......3.89%..........2,375
10. Amgen…........…………………..8.84%.......2.08%..........2,360
11. Qualcomm…………........……..8.84%.......3.09%..........1,443
12. Applied Materials…....……….8.84%.......1.03%..........1,144
13. Countryside Financial……….8.84%.......2.77%..........1,129
14. Franklin Resources……………8.84%.......2.76%............860
15. GAP………….......…………….....8.84%.......4.14%............797
16. McKesson…………….......……..8.84%......0.88%............752
17. Google………………......………..8.84%.......6.18%............723
18. Sempra Energy…………….......8.84%......3.96%............595
19. PG&E…………………………….....8.84%.......5.63%............547
20. Mattel…………......……………...8.84%......0.80%............525
21. Adobe Systems………….....…..8.84%......1.22%............514
22. Clorox……………………………...8.84%.......3.58%...........436
23. Safeway…………………………....8.84%.......5.39%..........433
24. Golden West Financial……….8.84%.......5.16%...........425
25. Ebay………………………………...8.84%.......5.13%...........422
26. DIRECTV………………………....8.84%........0.51%..........409
27. Linear Technology..............8.84%........1.87%..........388
28. Charles Schwab…………………8.84%........5.83%..........371
29. Maxim Integrated Products.8.84%.......2.09%..........367
30. Visa.....................................8.84%........5.25%..........364
31. Western Digital………………….8.84%….....0.11%..........307
32. Gilead Sciences………………….8.84%........5.64%..........301
Total all 32………………………………………67,270 (yeah, $67.3 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $50.9 bil, as compared to $67.3 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, 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, primarily California’s Silicon Valley, but also the greater LA area, have all of this incredible innovative expertise that is presently much more dormant than it should be. 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 Government, need to create the strong stimulative environment to permit these two key areas of California 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 California Corporate State Effective Income Tax Rates Paid by these 32 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 Big California Corps averaged only 2.13% in the most recent year. That massive tax rate paid variance between California Big Corps and individuals just doesn’t make any sense to me.
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 32 Big California Corps. These 32 Big California Corps below had a weighted average state corporate effective income tax rate paid for the past twelve years of a modest 2.61%, or a 70% 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)
32. Google…………....1,685…….27,244……..6.18%
31. Charles Schwab….719……..12,329……..5.83%
30. Gilead Sciences….529……....9,385……..5.64%
29. PG&E………………...960…….17,050……..5.63%
28. Safeway……………..676……..12,545……..5.39%
27. Visa......................531.......10,120........5.25%
26. Golden West Fincl.596……..11,552……..5.16%
25. Ebay……………….....583…….11,369……..5.13%
24. GAP………………......701…….16,945……..4.14%
23. Sempra Energy…...484…….12,209……..3.96%
22. Disney………….....1,864……47,950……..3.89%
21. Clorox…………….....297………8,296……..3.58%
20. Cisco Systems…..2,582…....72,442…….3.56%
19. Oracle………........2,303…....65,612……..3.51%
18. Apple……….........1,784…….51,465……...3.47%
17. Qualcomm…….......776…....25,105……..3.09%
16. Countrywide Fincl..515…....18,595....….2.77%
15. Franklin Resources.390…...14,140……..2.76%
14. Wells Fargo……....2,461…..108,550……..2.27%
13. Maxim Intgrtd Prds114.........5,442.......2.09%
12. Amgen………...........728…….34,933……..2.08%
11. Intel…………….......1,981…..101,986……..1.94%
10. Linear Technology.104.........5,562.......1.87%
..9. Chevron…………...3,057…..211,552……..1.45%
..8. Oxy Petroleum….....731…….55,238……..1.32%
..7. Adobe Systems.........82……...6,741……..1.22%
..6. Applied Materials....151…….14,654……..1.03%
..5. Hewlett-Packard.....642…….66,446……..0.97%
..4. McKesson…………......83………9,448……..0.88%
..3. Mattel……..................52………6,529…….0.80%
..2. DIRECTV…………….....25………4,914……..0.51%
..1. Western Digital………....4………3,515……..0.11%
Total all 32………......28,190…1,079,863…….2.61%
For the most recent 2009 year, the weighted state corporate effective income tax rate paid by these Big California Corps was an even lower 2.13%.
The huge Northrop Grumman was not included above, even though it generated a massive $15.6 bil of pretax income in the past twelve years. Northrop Grumman did not disclose the amounts of state income tax it paid. It passes on these costs to the US Government in its federal contracts.
Edison Intl, Yahoo, Intuit, Symantec, and First American all generated Total Pretax Income above $5 bil in the past 12 years. They were not included in the above list of Big Corps since their Total State Corporate Income Tax Loopholes Taken were lower than $300 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 32 Big California 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 California Corporate Income Tax Rate of 8.84% by the total Consolidated Pretax Income of each Big California 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.
………………………..........................CA……......State…….Resultant
………………….........…..............Corporate…Effective.......Higher
………………….........…………..........Tax……..Tax Rate…...State Tax
………………..........…………............Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
..1. Chevron………….......………….8.84%.......1.45%........15,644
..2. Wells Fargo………….........……8.84%......2.27%.........7,135
..3. Intel……………...........……......8.84%......1.94%.........7,035
..4. Hewlett-Packard......………...8.84%.......0.97%.........5,232
..5. Oxy Petroleum……………......8.84%.......1.32%..........4,152
..6. Cisco Systems………..………...8.84%.......3.56%..........3,822
..7. Oracle……………….......……....8.84%.......3.51%..........3,497
..8. Apple………………......………...8.84%.......3.47%..........2,766
..9. Disney………………………….....8.84%.......3.89%..........2,375
10. Amgen…........…………………..8.84%.......2.08%..........2,360
11. Qualcomm…………........……..8.84%.......3.09%..........1,443
12. Applied Materials…....……….8.84%.......1.03%..........1,144
13. Countryside Financial……….8.84%.......2.77%..........1,129
14. Franklin Resources……………8.84%.......2.76%............860
15. GAP………….......…………….....8.84%.......4.14%............797
16. McKesson…………….......……..8.84%......0.88%............752
17. Google………………......………..8.84%.......6.18%............723
18. Sempra Energy…………….......8.84%......3.96%............595
19. PG&E…………………………….....8.84%.......5.63%............547
20. Mattel…………......……………...8.84%......0.80%............525
21. Adobe Systems………….....…..8.84%......1.22%............514
22. Clorox……………………………...8.84%.......3.58%...........436
23. Safeway…………………………....8.84%.......5.39%..........433
24. Golden West Financial……….8.84%.......5.16%...........425
25. Ebay………………………………...8.84%.......5.13%...........422
26. DIRECTV………………………....8.84%........0.51%..........409
27. Linear Technology..............8.84%........1.87%..........388
28. Charles Schwab…………………8.84%........5.83%..........371
29. Maxim Integrated Products.8.84%.......2.09%..........367
30. Visa.....................................8.84%........5.25%..........364
31. Western Digital………………….8.84%….....0.11%..........307
32. Gilead Sciences………………….8.84%........5.64%..........301
Total all 32………………………………………67,270 (yeah, $67.3 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken was $50.9 bil, as compared to $67.3 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, 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, primarily California’s Silicon Valley, but also the greater LA area, have all of this incredible innovative expertise that is presently much more dormant than it should be. 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 Government, need to create the strong stimulative environment to permit these two key areas of California 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 California Corporate State Effective Income Tax Rates Paid by these 32 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 Big California Corps averaged only 2.13% in the most recent year. That massive tax rate paid variance between California Big Corps and individuals just doesn’t make any sense to me.
Monday, November 15, 2010
New Jersey Big Corps Have Paid Little in State Corporate Income Taxes
In performing a quick review of SEC filings of large corps with an SEC State Location Code in New Jersey, I found thirteen corps with State Corporate Income Tax Loopholes Taken, at least the way I measure them, of at least $300 mil each, 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 thirteen Big New Jersey Corps. These thirteen Big New Jersey Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.02%, or a huge 78% discount to New Jersey’s current state corporate income tax rate of 9.00%.
….…………………….....................Current…………………......State
….…………………….......................State...Consolidated..Effective
….…………………….......................Tax……….Pretax………Tax Rate
….…………………….......................Paid……..Income……….Paid
….……………….…......................(Millions of Dollars)
13. Bed Bath & Beyond..............330…........7,349……...4.49%
12. NRG Energy……...................287…........7,201....…..3.99%
11. Automatic Data Processing..527.........18,616…......2.83%
10. Merck..............................2,703….....105,533……..2.56%
..9. JNJ…...............................2,980*…...130,055……..2.29%
..8. Campbell Soup....................232…….....12,192……..1.90%
..7. Trane….................................76….........4,200……..1.81%
..6. Honeywell..........................406…….....24,544……..1.65%
..5. Schering-Plough…...............258..........15,995.…....1.61%
..4. Becton Dickinson.................145……....10,413……..1.39%
..3. Prudential Financial............297……....21,988……..1.35%
..2. Wyeth…………........................88……....34,285……..0.26%
..1. Chubb.....................................0….......20,513.…….0.00%
Total all 13……….....................8,329….....412,884……..2.02%
* 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
For the most recent year 2009, this weighted average effective state corporate income tax rate paid was an even lower 1.44% for these large New Jersey Corps.
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 thirteen large 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 Corporate Income Tax Rate of 9.00% by the total Consolidated Pretax Income of each large New Jersey Corp for the last twelve years. Then, I subtracted the actual total State Income Tax Paid, and in some cases also Local Income Tax Paid, and for JNJ, also Deferred State Income Tax Expense, by each of these Corps for the same twelve years.
……………………….........................NJ……......State……..Resultant
………………….........….............Corporate..Effective.......Higher
………………….........………….........Tax……..Tax Rate…...State Tax
………………..........…………...........Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
1.. JNJ………….......…………........9.00%.......2.29%...........8,725
2.. Merck.................................9.00%.......2.56%...........6,795
3.. Wyeth……….........................9.00%.......0.26%..........2,998
4.. Chubb…………………..............9.00%.......0.00%..........1,846
5.. Honeywell…………................9.00%.......1.65%...........1,803
6.. Prudential Financial………....9.00%.......1.35%...........1,682
7.. Schering-Plough......………….9.00%.......1.61%...........1,182
8.. Automatic Data Processing..9.00%.......2.83%...........1,148
9.. Campbell Soup……...............9.00%.......1.90%..............865
10. Becton Dickinson………….....9.00%.......1.39%..............792
11. NRG Energy……...................9.00%.......3.99%..............361
12. Bed Bath & Beyond…...........9.00%.......4.49%..............330
13. Trane…………………...............9.00%.......1.81%..............302
Total all 13…………………………………………28,831 (yeah, $28.8 bil)
For the most recent six years, the related estimated total State Corporate Income Tax Loopholes Taken, as I have defined them above, by these thirteen large New Jersey Corps, was $17.9 bil, as compared to $28.8 bil for the past twelve years.
The four Big Pharma New Jersey Corps included in the above list comprise $19.7 bil, or a very high 68% of the total $28.8 bil of State Corporate Income Tax Loopholes Taken by all thirteen of these Big New Jersey Corps in the most recent dozen years.
At first glance, New Jersey’s statutory corporate income tax rate of 9.00% seems high. However, it hasn’t prevented many of New Jersey’s Big Corps from paying much lower effective tax rates, which averaged just 2.02% in the past twelve years for the above thirteen large corps. My hunch is that many profitable small and medium-sized New Jersey Corps are actually paying much higher than this average 2.02% tax rate paid by these thirteen New Jersey Big Corps, but also they are paying lower than the 9.00% New Jersey statutory tax rate.
Also, from a fairness standpoint, the above effective New Jersey Corporate State Income Tax Rates Paid by these thirteen Big Corps of 2.02% is very low in comparison with New Jersey’s current individual income tax rate of 5.525% for income above $40,000 and up to $75,000, and of 6.37% for income above $75,000 and up to $500,000.
It looks to me like the State of New Jersey has an opportunity here to significantly reduce its severely-stressed fiscal status by closing some of these huge Big Corp State Income Tax Loopholes.
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.
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 thirteen Big New Jersey Corps. These thirteen Big New Jersey Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.02%, or a huge 78% discount to New Jersey’s current state corporate income tax rate of 9.00%.
….…………………….....................Current…………………......State
….…………………….......................State...Consolidated..Effective
….…………………….......................Tax……….Pretax………Tax Rate
….…………………….......................Paid……..Income……….Paid
….……………….…......................(Millions of Dollars)
13. Bed Bath & Beyond..............330…........7,349……...4.49%
12. NRG Energy……...................287…........7,201....…..3.99%
11. Automatic Data Processing..527.........18,616…......2.83%
10. Merck..............................2,703….....105,533……..2.56%
..9. JNJ…...............................2,980*…...130,055……..2.29%
..8. Campbell Soup....................232…….....12,192……..1.90%
..7. Trane….................................76….........4,200……..1.81%
..6. Honeywell..........................406…….....24,544……..1.65%
..5. Schering-Plough…...............258..........15,995.…....1.61%
..4. Becton Dickinson.................145……....10,413……..1.39%
..3. Prudential Financial............297……....21,988……..1.35%
..2. Wyeth…………........................88……....34,285……..0.26%
..1. Chubb.....................................0….......20,513.…….0.00%
Total all 13……….....................8,329….....412,884……..2.02%
* 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
For the most recent year 2009, this weighted average effective state corporate income tax rate paid was an even lower 1.44% for these large New Jersey Corps.
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 thirteen large 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 Corporate Income Tax Rate of 9.00% by the total Consolidated Pretax Income of each large New Jersey Corp for the last twelve years. Then, I subtracted the actual total State Income Tax Paid, and in some cases also Local Income Tax Paid, and for JNJ, also Deferred State Income Tax Expense, by each of these Corps for the same twelve years.
……………………….........................NJ……......State……..Resultant
………………….........….............Corporate..Effective.......Higher
………………….........………….........Tax……..Tax Rate…...State Tax
………………..........…………...........Rate……....Paid…....Last 12 Years
…………………………………………………....................(Millions of dollars)
1.. JNJ………….......…………........9.00%.......2.29%...........8,725
2.. Merck.................................9.00%.......2.56%...........6,795
3.. Wyeth……….........................9.00%.......0.26%..........2,998
4.. Chubb…………………..............9.00%.......0.00%..........1,846
5.. Honeywell…………................9.00%.......1.65%...........1,803
6.. Prudential Financial………....9.00%.......1.35%...........1,682
7.. Schering-Plough......………….9.00%.......1.61%...........1,182
8.. Automatic Data Processing..9.00%.......2.83%...........1,148
9.. Campbell Soup……...............9.00%.......1.90%..............865
10. Becton Dickinson………….....9.00%.......1.39%..............792
11. NRG Energy……...................9.00%.......3.99%..............361
12. Bed Bath & Beyond…...........9.00%.......4.49%..............330
13. Trane…………………...............9.00%.......1.81%..............302
Total all 13…………………………………………28,831 (yeah, $28.8 bil)
For the most recent six years, the related estimated total State Corporate Income Tax Loopholes Taken, as I have defined them above, by these thirteen large New Jersey Corps, was $17.9 bil, as compared to $28.8 bil for the past twelve years.
The four Big Pharma New Jersey Corps included in the above list comprise $19.7 bil, or a very high 68% of the total $28.8 bil of State Corporate Income Tax Loopholes Taken by all thirteen of these Big New Jersey Corps in the most recent dozen years.
At first glance, New Jersey’s statutory corporate income tax rate of 9.00% seems high. However, it hasn’t prevented many of New Jersey’s Big Corps from paying much lower effective tax rates, which averaged just 2.02% in the past twelve years for the above thirteen large corps. My hunch is that many profitable small and medium-sized New Jersey Corps are actually paying much higher than this average 2.02% tax rate paid by these thirteen New Jersey Big Corps, but also they are paying lower than the 9.00% New Jersey statutory tax rate.
Also, from a fairness standpoint, the above effective New Jersey Corporate State Income Tax Rates Paid by these thirteen Big Corps of 2.02% is very low in comparison with New Jersey’s current individual income tax rate of 5.525% for income above $40,000 and up to $75,000, and of 6.37% for income above $75,000 and up to $500,000.
It looks to me like the State of New Jersey has an opportunity here to significantly reduce its severely-stressed fiscal status by closing some of these huge Big Corp State Income Tax Loopholes.
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.
Saturday, November 13, 2010
Connecticut Big Corps Have Paid So Very Little in State Corporate Income Taxes
In performing a quick review of SEC filings of large corps with an SEC State Location Code in Connecticut, I found 9 corps with State Corporate Income Tax Loopholes Taken, at least the way I measure them, of at least $200 mil each, 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 9 Big Connecticut Corps. These 9 Big Connecticut Corps below had a weighted average state corporate effective income tax rate paid of an incredibly low 1.40%, or a massive 81% discount to Connecticut’s current state corporate income tax rate of 7.50%.
….……………………..................Current…………………......State
….……………………....................State...Consolidated..Effective
….……………………....................Tax……….Pretax………Tax Rate
….……………………....................Paid……..Income……….Paid
….……………….…....................(Millions of Dollars)
..9. Pitney Bowes....................411............8,793.........4.67%
..8. UST..................................214............6,367.........3.36%
..7. Aetna…………………….........462…….....16,827……..2.75%
..6. Xerox……………..................126……......7,590………1.66%
..5. GE..................................3,156........235,906.….....1.34%
..4. United Technologies.........487……....48,572……...1.00%
..3. Praxair...............................94…….....11,952…......0.79%
..2. Interactive Brokers Grp……..8….........5,550……...0.14%
..1. Hartford Financial Services…0….......12,528……...0.00%
Total all 9………....................4,958….....354,085……...1.40%
For the most recent six years, the weighted state corporate effective income tax rate paid by these 9 Big Connecticut Corps was an even lower 1.11%.
For the seven larger States I have studied so far, Connecticut clearly gets the booby prize for having by far both the lowest effective state corporate income tax rate paid by its largest Corps for the last twelve years, and also the highest discount from the current State Corporate Income Tax Rate. The State of Connecticut has clearly underperformed 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%
Minnesota……………2.76%.............9.80%...........72%
California……………..2.39%.............8.84%...........73%
Illinois………………...1.97%.............7.30%...........73%
Pennsylvania………..2.25%.............9.99%...........77%
Connecticut………....1.40%.............7.50%………...81%
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 9 Big Connecticut 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 Connecticut Corporate Income Tax Rate of 7.50% by the total Consolidated Pretax Income of each Big Connecticut 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.
………………………........................CT…….....State……..Resultant
………………….........…............Corporate…Effective.......Higher
………………….........…………........Tax……..Tax Rate…...State Tax
………………..........…………..........Rate……....Paid…....Last 12 Years
…………………………………………………….................(Millions of dollars)
1.. GE………..............................7.50%.......1.34%.........14,537
2.. United Technologies ..........7.50%.......1.00%..........3,156
3.. Hartford Financial Services.7.50%......0.00%.............940
4.. Praxair….............................7.50%......0.79%.............802
5.. Aetna…...............................7.50%......2.75%..............800
6.. Xerox……………………............7.50%......1.66%..............443
7.. Interactive Brokers Group…7.50%......0.14%.............408
8.. UST.....................................7.50%.......3.36%.............264
9.. Pitney Bowes.......................7.50%.......4.67%.............248
Total all 9………………………………………….21,598 (yeah, $21.6 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken by these 9 Connecticut Big Corps was $13.2 bil, as compared to $21.6 bil for the past twelve years.
Also, from a fairness standpoint, the above effective Connecticut Corporate State Income Tax Rates Paid by these 9 Big Corps in the past twelve years of only 1.40% is substantially below the Connecticut current individual income tax rate, which is 5.00% for income above $10,000 and up to $500,000.
It looks to me that the State of Connecticut has the opportunity to significantly improve its financial coffers by closing some of these Big Corp State Income Tax Loopholes.
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.
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 9 Big Connecticut Corps. These 9 Big Connecticut Corps below had a weighted average state corporate effective income tax rate paid of an incredibly low 1.40%, or a massive 81% discount to Connecticut’s current state corporate income tax rate of 7.50%.
….……………………..................Current…………………......State
….……………………....................State...Consolidated..Effective
….……………………....................Tax……….Pretax………Tax Rate
….……………………....................Paid……..Income……….Paid
….……………….…....................(Millions of Dollars)
..9. Pitney Bowes....................411............8,793.........4.67%
..8. UST..................................214............6,367.........3.36%
..7. Aetna…………………….........462…….....16,827……..2.75%
..6. Xerox……………..................126……......7,590………1.66%
..5. GE..................................3,156........235,906.….....1.34%
..4. United Technologies.........487……....48,572……...1.00%
..3. Praxair...............................94…….....11,952…......0.79%
..2. Interactive Brokers Grp……..8….........5,550……...0.14%
..1. Hartford Financial Services…0….......12,528……...0.00%
Total all 9………....................4,958….....354,085……...1.40%
For the most recent six years, the weighted state corporate effective income tax rate paid by these 9 Big Connecticut Corps was an even lower 1.11%.
For the seven larger States I have studied so far, Connecticut clearly gets the booby prize for having by far both the lowest effective state corporate income tax rate paid by its largest Corps for the last twelve years, and also the highest discount from the current State Corporate Income Tax Rate. The State of Connecticut has clearly underperformed 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%
Minnesota……………2.76%.............9.80%...........72%
California……………..2.39%.............8.84%...........73%
Illinois………………...1.97%.............7.30%...........73%
Pennsylvania………..2.25%.............9.99%...........77%
Connecticut………....1.40%.............7.50%………...81%
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 9 Big Connecticut 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 Connecticut Corporate Income Tax Rate of 7.50% by the total Consolidated Pretax Income of each Big Connecticut 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.
………………………........................CT…….....State……..Resultant
………………….........…............Corporate…Effective.......Higher
………………….........…………........Tax……..Tax Rate…...State Tax
………………..........…………..........Rate……....Paid…....Last 12 Years
…………………………………………………….................(Millions of dollars)
1.. GE………..............................7.50%.......1.34%.........14,537
2.. United Technologies ..........7.50%.......1.00%..........3,156
3.. Hartford Financial Services.7.50%......0.00%.............940
4.. Praxair….............................7.50%......0.79%.............802
5.. Aetna…...............................7.50%......2.75%..............800
6.. Xerox……………………............7.50%......1.66%..............443
7.. Interactive Brokers Group…7.50%......0.14%.............408
8.. UST.....................................7.50%.......3.36%.............264
9.. Pitney Bowes.......................7.50%.......4.67%.............248
Total all 9………………………………………….21,598 (yeah, $21.6 bil)
For the most recent six years, the estimated total State Corporate Income Tax Loopholes Taken by these 9 Connecticut Big Corps was $13.2 bil, as compared to $21.6 bil for the past twelve years.
Also, from a fairness standpoint, the above effective Connecticut Corporate State Income Tax Rates Paid by these 9 Big Corps in the past twelve years of only 1.40% is substantially below the Connecticut current individual income tax rate, which is 5.00% for income above $10,000 and up to $500,000.
It looks to me that the State of Connecticut has the opportunity to significantly improve its financial coffers by closing some of these Big Corp State Income Tax Loopholes.
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.
Friday, November 12, 2010
Minnesota 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 Minnesota, I found 17 corps with pretty large State Corporate Income Tax Loopholes Taken, at least the way I measure them, of at least $250 mil each, in the last dozen years.
I didn’t realize just how many large corps are headquartered in Minnesota….that’s pretty cool! And after thoroughly reviewing the annual earnings trend of its Big Corps, I am really impressed with the high quality and consistency of these companies. It's easy for me to understand why the State of Minnesota's unemployment rate is not nearly as high right now as that of many other US States. I think there is a direct correlation between how businesses are doing in a State and a State's unemployment rate.
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 17 large Minnesota Corps. These 17 large Minnesota Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.79%, or a huge 72% discount to Minnesota’s current state corporate income tax rate of 9.80%.
….……………………............Current…………………......State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
17. Target………...............1,927….....36,809……..5.24%
16. Supervalu...................300..........6,143**......4.88%
15. US Bancorp….............2,283……..52,473……..4.35%
14. Ecolab..........................227*….....5,315……..4.27%
13. Best Buy..…………..........659…......16,209....…4.07%
12. Hormel Foods...............165…........4,259…….3.87%
11. CHS...............................183*.........4,941.......3.70%
10. Xcel Energy...................280….......9,801…….2.86%
..9. General Mills…..............456……...17,269…….2.64%
..8. UnitedHealth Group...1,014……...41,242……..2.46%
..7. St. Jude Medical….........134…........6,329***…2.12%
..6. TCF Financial..................69………..3,690……..1.87%
..5. Ameriprise Financial…....88..........5,030.…....1.75%
..4. Mosaic...........................116……….7,408……..1.57%
..3. Medtronic.....................409*…….31,607***…1.29%
..2. 3M………….....................563……...47,265……..1.19%
..1. Travelers.........................99……...26,156.…….0.38%
Total all 17………...............8,972…...321,946……..2.79%
* Current and Deferred State Tax Combined
** Exclusive of large Asset Impairment Charge
*** Exclusive of large Acquired In Process R&D Charges
For the most recent year 2009, this weighted average effective state corporate income tax rate paid was an even lower 2.04% for these 17 large Minnesota Corps.
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 Minnesota 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 Minnesota Corporate Income Tax Rate of 9.80% by the total Consolidated Pretax Income of each large Minnesota Corp for the last twelve years. Then, I subtracted the actual total State Income Tax Paid, and in some cases also Local Income Tax Paid, and in two instances, also Deferred State Income Tax Expense, by each of these Corps for the same twelve years.
……………………….....................MN……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. 3M………….......…………....9.80%......1.19%............4,069
2.. UnitedHealth Group.......9.80%......2.46%...........3,028
3.. US Bancorp………............9.80%......4.35%............2,859
4.. Medtronic…………...........9.80%.......1.29%............2,688
5.. Travelers…………………....9.80%.......0.38%...........2,464
6.. Target………………………...9.80%.......5.24%............1,680
7.. General Mills......………….9.80%.......2.64%............1,236
8.. Best Buy……………….........9.80%.......4.07%..............929
9.. Xcel Energy……...............9.80%.......2.86%..............680
10. Mosaic....…………………….9.80%.......1.57%..............610
11. St. Jude Medical……........9.80%.......2.12%..............486
12. Ameriprise Financial…....9.80%......1.75%..............405
13. Supervalu.......................9.80%.......4.88%..............302
14. CHS.................................9.80%......3.70%..............301
15. Ecolab…………………….......9.80%......4.27%..............294
16. TCF Financial...................9.80%......1.87%..............293
17. Hormel Foods..................9.80%......3.87%..............252
Total all 17…………………………………………22,579 (yeah, $22.6 bil)
For the most recent six years, the related estimated total State Corporate Income Tax Loopholes Taken, as I have defined them above, by these 17 large Minnesota Corps, was $16.1 bil, as compared to $22.6 bil for the past twelve years.
At first glance, Minnesota’s statutory corporate income tax rate of 9.80% seems high. However, it hasn’t prevented many of Minnesota's Big Corps from paying much lower effective tax rates, which averaged just 2.79% in the past twelve years for the above 17 corps. My hunch is that many profitable small and medium-sized Minnesota Corps are actually paying higher than this average 2.79% tax rate paid by these 17 Minnesota Big Corps, but also are paying much lower than the 9.80% statutory tax rate.
Particularly given its climate, I think Minnesota businesses and its residents would both be helped immensely by a vibrant US energy tax credit for all businesses that perform Green Energy Commercial Building Retrofit Upgrades.
Also, 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.
From a fairness standpoint, the above effective Minnesota Corporate State Income Tax Rates Paid by these 17 Big Corps of 2.79% is very low in comparison with Minnesota’s current individual income tax rate of 7.05% for income above $22,770 up to $74,780, and of 7.85% for income above $74,780.
It looks to me like the State of Minnesota has an opportunity here to strengthen its financial coffers significantly by closing some of these huge Big Corp State Income Tax Loopholes.
I didn’t realize just how many large corps are headquartered in Minnesota….that’s pretty cool! And after thoroughly reviewing the annual earnings trend of its Big Corps, I am really impressed with the high quality and consistency of these companies. It's easy for me to understand why the State of Minnesota's unemployment rate is not nearly as high right now as that of many other US States. I think there is a direct correlation between how businesses are doing in a State and a State's unemployment rate.
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 17 large Minnesota Corps. These 17 large Minnesota Corps below had a weighted average state corporate effective income tax rate paid of a very modest 2.79%, or a huge 72% discount to Minnesota’s current state corporate income tax rate of 9.80%.
….……………………............Current…………………......State
….……………………..............State...Consolidated..Effective
….……………………..............Tax……….Pretax………Tax Rate
….……………………..............Paid……..Income……….Paid
….……………….…..............(Millions of Dollars)
17. Target………...............1,927….....36,809……..5.24%
16. Supervalu...................300..........6,143**......4.88%
15. US Bancorp….............2,283……..52,473……..4.35%
14. Ecolab..........................227*….....5,315……..4.27%
13. Best Buy..…………..........659…......16,209....…4.07%
12. Hormel Foods...............165…........4,259…….3.87%
11. CHS...............................183*.........4,941.......3.70%
10. Xcel Energy...................280….......9,801…….2.86%
..9. General Mills…..............456……...17,269…….2.64%
..8. UnitedHealth Group...1,014……...41,242……..2.46%
..7. St. Jude Medical….........134…........6,329***…2.12%
..6. TCF Financial..................69………..3,690……..1.87%
..5. Ameriprise Financial…....88..........5,030.…....1.75%
..4. Mosaic...........................116……….7,408……..1.57%
..3. Medtronic.....................409*…….31,607***…1.29%
..2. 3M………….....................563……...47,265……..1.19%
..1. Travelers.........................99……...26,156.…….0.38%
Total all 17………...............8,972…...321,946……..2.79%
* Current and Deferred State Tax Combined
** Exclusive of large Asset Impairment Charge
*** Exclusive of large Acquired In Process R&D Charges
For the most recent year 2009, this weighted average effective state corporate income tax rate paid was an even lower 2.04% for these 17 large Minnesota Corps.
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 Minnesota 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 Minnesota Corporate Income Tax Rate of 9.80% by the total Consolidated Pretax Income of each large Minnesota Corp for the last twelve years. Then, I subtracted the actual total State Income Tax Paid, and in some cases also Local Income Tax Paid, and in two instances, also Deferred State Income Tax Expense, by each of these Corps for the same twelve years.
……………………….....................MN……......State……..Resultant
………………….........….........Corporate…Effective.......Higher
………………….........………….....Tax……..Tax Rate…...State Tax
………………..........………….......Rate……....Paid…....Last 12 Years
…………………………………………………...................(Millions of dollars)
1.. 3M………….......…………....9.80%......1.19%............4,069
2.. UnitedHealth Group.......9.80%......2.46%...........3,028
3.. US Bancorp………............9.80%......4.35%............2,859
4.. Medtronic…………...........9.80%.......1.29%............2,688
5.. Travelers…………………....9.80%.......0.38%...........2,464
6.. Target………………………...9.80%.......5.24%............1,680
7.. General Mills......………….9.80%.......2.64%............1,236
8.. Best Buy……………….........9.80%.......4.07%..............929
9.. Xcel Energy……...............9.80%.......2.86%..............680
10. Mosaic....…………………….9.80%.......1.57%..............610
11. St. Jude Medical……........9.80%.......2.12%..............486
12. Ameriprise Financial…....9.80%......1.75%..............405
13. Supervalu.......................9.80%.......4.88%..............302
14. CHS.................................9.80%......3.70%..............301
15. Ecolab…………………….......9.80%......4.27%..............294
16. TCF Financial...................9.80%......1.87%..............293
17. Hormel Foods..................9.80%......3.87%..............252
Total all 17…………………………………………22,579 (yeah, $22.6 bil)
For the most recent six years, the related estimated total State Corporate Income Tax Loopholes Taken, as I have defined them above, by these 17 large Minnesota Corps, was $16.1 bil, as compared to $22.6 bil for the past twelve years.
At first glance, Minnesota’s statutory corporate income tax rate of 9.80% seems high. However, it hasn’t prevented many of Minnesota's Big Corps from paying much lower effective tax rates, which averaged just 2.79% in the past twelve years for the above 17 corps. My hunch is that many profitable small and medium-sized Minnesota Corps are actually paying higher than this average 2.79% tax rate paid by these 17 Minnesota Big Corps, but also are paying much lower than the 9.80% statutory tax rate.
Particularly given its climate, I think Minnesota businesses and its residents would both be helped immensely by a vibrant US energy tax credit for all businesses that perform Green Energy Commercial Building Retrofit Upgrades.
Also, 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.
From a fairness standpoint, the above effective Minnesota Corporate State Income Tax Rates Paid by these 17 Big Corps of 2.79% is very low in comparison with Minnesota’s current individual income tax rate of 7.05% for income above $22,770 up to $74,780, and of 7.85% for income above $74,780.
It looks to me like the State of Minnesota has an opportunity here to strengthen its financial coffers significantly by closing some of these huge Big Corp State Income Tax Loopholes.
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