From the Morning Call:
What do Air Products & Chemicals, Comcast and H.J. Heinz all have in common?
They're among the 68 companies singled out in a new report for not paying state income taxes for at least one year between 2008 and 2010 in the states where they did business .
Two more companies with significant footprints in Pennsylvania -- Chesapeake Energy and Verizon -- also did not pay state corporate taxes for at least one year, according to research compiled by the Institute for Taxation and Economic Policy (ITEP) and Citizens for Tax Justice, a pair of Washigton-based research and advocacy groups.
The report's author, ITEP Executive Director Matthew Gardner, says there's no intimation of any wrongdoing in the document's findings.The companies' tax situation is the "understandable outcome of a series of decisions made by state and federal lawmakers that are well-intentioned," but don't always have a beneficial effect on states' bottom lines.
Legislative Democrats in Pennsylvania have long pushed to close loopholes in state tax law that enable companies to avoid paying corporate income taxes. Republicans have countered that the state needs to lower its corporate net income tax to make Pennsylvania more attractive to business.
At least one of the companies, Chesapeake Energy, meanwhile, is vigorously disputing the group's claim and says its methodology is flawed.
Read the full results and the text of the report after the bills-paying "Read More" link below.
The Securities and Exchange Commission requires all publicly traded companies to annually file the amount they pay in federal income taxes, heir American pre-tax profits and their nationwide state income tax payments, the report's author, Gardner, said.
Thus, it's impossible to tell from the study how much the companies did -- or did not pay -- in Pennsylvania corporate taxes during the three-year period cited in the report. Pennsylania does not disclose the information.
Based on the study, Air Products paid $25 million in state taxes on profits of $1.3 billion between 2008 and 2010, giving the company an effective tax rate of 1.9 percent during that time period. The Lehigh Valley employer had no-tax years in 2008 and 2010, the study shows.
The study shows that Philadelphia-based Comcast paid $513 million in state taxes nationwide between 2008 and 2010 on U.S. profits of $15.2 billion, for an effective tax rate of 3.4 percent. The cable giant had a no-tax year in 2009, the study shows.
Chesapeake, which is among the companies participating in Pennsylvania's Marcellus shale natural gas boom, received a $173 million rebate on U.S. profits of $8.3 billion, the study showed. The company had a 3-year effective tax rate of -2.1 percent between 2008 and 2010.
According to Gardner, the companies are the beneficiaries of tax laws that give breaks to firms that make large investments in infrastructure and equipment.
Utilities, such as Verizon and Chesapeake, are required to make regular infrastructure investments. That, according to Gardner, raises the question of whether the companies are doing it to receive the tax break or are receiving tax breaks for something they would have done anyway.
In an e-mail, Chesapeake vigorously disputed the report's methodology, arguing that "the person that put this information together clearly does not understand the difference between income tax expense for financial accounting purposes (Book) and the actual income taxes paid by taxpayers."
"The numbers they utilized are actual numbers from our financial statements, but the numbers are being improperly utilized," the company said. "Furthermore, they are not consistent in their approach to examining the improper number ... Chesapeake did not receive $173 million in state tax refunds over this period. Book numbers are calculated using a completely different set of rules than those used for determining a taxpayer's actual cash tax liability."
According to data compiled by the state Department of Revenue, Pennsylvania companies paid $39.4 million in corporate taxes in November, which was $24.2 million less than anticipated. Year-to-date corporate tax revenues were $750.7 million, which is $167 million, or 18.2 percent less than anticipated.
Six months into the current fiscal year, the state has collected $9.4 billion in general fund revenue, which is $345.3 million, or 3.6 percent less than anticipated.
Here's the full text of the report