Look at the last article .... any idea what the "rude awakening" might be?
----- Forwarded by Steven J Kean/NA/Enron on 10/22/2000 07:30 PM -----

	Ann M Schmidt
	10/20/2000 07:58 AM
		 
		 To: Mark Palmer/Corp/Enron@ENRON, Karen Denne/Corp/Enron@ENRON, Meredith 
Philipp/Corp/Enron@ENRON, Steven J Kean/NA/Enron@Enron, Mary 
Clark/Corp/Enron@ENRON, Laura Schwartz/Corp/Enron@Enron, Eric 
Thode/Corp/Enron@ENRON, Elizabeth Linnell/NA/Enron@Enron
		 cc: 
		 Subject: Enron Mentions






Business/Financial Desk; Section C 
Study Finds That Many Large Companies Pay No Taxes 
By DAVID CAY JOHNSTON 
? 
10/20/2000 
The New York Times 
Page 2, Column 1 
c. 2000 New York Times Company 
Goodyear, Texaco, Colgate-Palmolive, MCI WorldCom and eight other large 
corporations earned more than $12.2 billion in profits in 1996 through 1998, 
but none of them ended up owing corporate income taxes over that period, 
according to a study released yesterday. Indeed, as a group, the companies 
received $535 million in credits or refunds, the report found. 
The study of 250 large publicly traded companies showed that 24 owed no tax 
or received credits against past or future tax obligations in 1998, up from 
13 in 1997 and 16 in 1996. The study also found that 71 of the 250 companies 
paid taxes at less than half the official 35 percent corporate rate during 
the three-year period. 
The study was conducted by the Institute on Taxation and Economic Policy, a 
Washington research organization associated with Citizens for Tax Justice, a 
nonprofit group supported in part by labor unions. The group argues that the 
tax system favors the rich and politically connected. 
Corporate profits overall soared 23.5 percent during the three-year period, 
but corporate tax revenues grew just 7.7 percent, a disjunction that has 
drawn intense interest from the Treasury Department and some members of 
Congress who are concerned about the growing market for tax shelters and 
their abuse. 
In recent years, Congress has watered down the 1986 overhaul of the tax laws, 
which lowered rates and eliminated most tax shelters, and was supposed to 
simplify reporting. The recent changes have opened fresh opportunities for 
corporations to cut their taxes, the study found. 
''Corporate taxes are not rising along with profits because companies have 
found all sorts of ways to get around the reforms in the 1986 tax act,'' said 
Robert S. McIntyre, the director of Citizens for Tax Justice. ''Companies 
also have gotten a lot of help from Congress, especially in gutting the 
minimum tax rules.'' 
Mr. McIntyre said that he and T. D. Coo Nguyen, the co-author, spent more 
than two years examining financial statements the companies sent to 
shareholders. 
All but 18 of the companies studied are on the Fortune 500 list, and the 
others are in the Fortune 1000. He said companies were excluded if they lost 
money or their tax disclosures ''were crafted so that you could not figure 
them out.'' 
At least two companies objected to the study's methodology. 
Keith Price, a spokesman for Goodyear, said the study did not appear to 
consider an accounting rule affecting its sale of a pipeline subsidiary in 
1998. It made no objection to the 1996 and 1997 figures. 
Michael N. Ambler, Texaco's chief tax counsel, said that his company had tax 
disputes with the Internal Revenue Service that were unresolved after more 
than a decade. If those disputes are settled with a refund, he said, that can 
easily distort the figures for any one year. He said that even the three-year 
study period was too short to give an accurate picture. 
Timothy McCormally of the Tax Executives Institute, which represents 
officials at large companies, told Bloomberg News that the companies named in 
the report did nothing wrong. ''There is nothing in the report that suggests 
that any of this results from any illegal or improper activity,'' he said. 
The study by the Washington institute showed that the corporate tax burden 
was falling in many cases because of the growing use of stock options, which 
are an expense for tax purposes but do not count against profits reported to 
shareholders. 
Recent annual reports filed by Microsoft and Cisco Systems indicate that they 
paid no federal income taxes in 1999 because stock options exercised by 
employees wiped out profits for tax purposes. 
The study found that General Electric, I.B.M., Pfizer, Intel and 
Bristol-Myers Squibb also sharply reduced their tax rates because of stock 
options without having to show reduced earnings to shareholders. 
The most significant factor in the easing corporate tax burden, Mr. McIntyre 
said, can be traced to actions in Congress, which relaxed the corporate 
minimum tax in 1993 when the Democrats were in control of both the House and 
Senate, and again in 1997, after the Republicans had taken over. Congress 
made it easier for corporations to spread tax breaks and profits over many 
years, including reaching back to past years to get tax breaks that could not 
be used at the time. 
In at least one of the three years studied, 41 of the 250 large companies 
studied paid no federal income tax. Those 41 companies reported $25.8 billion 
in profits to shareholders in the years they paid no taxes. If they had been 
obligated to pay the full 35 percent corporate rate, the tax bill would have 
been $9 billion, but the companies received $3.2 billion in refunds. 
In total dollars, General Electric was the biggest beneficiary of tax breaks, 
the study said, saving $6.9 billion in three years. The company paid $2.1 
billion in income taxes on $25.8 billion in profits, for a tax rate of 8.1 
percent. 
The highest tax rate for the three years was paid by Winn-Dixie Stores, which 
paid an average of 35.7 percent of its 1996 through 1998 profits in federal 
income taxes. It was one of two companies that paid more than the 35 percent 
statutory rate because of multiyear tax rules. The other was Paccar. 

Chart: ''Profits Without Pain'' In a study of 250 large and profitable 
companies, these 17 paid the least in corporate taxes -- or got the biggest 
refunds -- as a percentage of profits from 1996 to 1998. Goodyear 1996-98 
PROFITS, IN MILLIONS: $657 TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: 
-$ 65 EFFECTIVE TAX RATE: -9.9 Texaco 1996-98 PROFITS, IN MILLIONS: 3,447 
TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: - 304 EFFECTIVE TAX RATE: 
-8.8 Ryder 1996-98 PROFITS, IN MILLIONS: 489 TOTAL TAX REFUNDED OR PAID, 
1996-98, IN MILLIONS: - 30 EFFECTIVE TAX RATE: -6.2 El Paso Energy 1996-98 
PROFITS, IN MILLIONS: 818 TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: - 
36 EFFECTIVE TAX RATE: -4.4 MedPartners 1996-98 PROFITS, IN MILLIONS: 184 
TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: - 4 EFFECTIVE TAX RATE: 
-2.1 Tenneco 1996-98 PROFITS, IN MILLIONS: 731 TOTAL TAX REFUNDED OR PAID, 
1996-98, IN MILLIONS: - 14 EFFECTIVE TAX RATE: -1.9 Colgate-Palmolive 1996-98 
PROFITS, IN MILLIONS: 777 TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: - 
14 EFFECTIVE TAX RATE: -1.7 MCI WorldCom 1996-98 PROFITS, IN MILLIONS: 3,578 
TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: - 61 EFFECTIVE TAX RATE: 
-1.7 Corporate Express* 1996-98 PROFITS, IN MILLIONS: 214 TOTAL TAX REFUNDED 
OR PAID, 1996-98, IN MILLIONS: - 4 EFFECTIVE TAX RATE: -1.6 WestPoint Stevens 
1996-98 PROFITS, IN MILLIONS: 339 TOTAL TAX REFUNDED OR PAID, 1996-98, IN 
MILLIONS: - 3 EFFECTIVE TAX RATE: -0.7 Kmart 1996-98 PROFITS, IN MILLIONS: 
978 TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: - 2 EFFECTIVE TAX RATE: 
-0.2 Enron 1996-98 PROFITS, IN MILLIONS: 816 TOTAL TAX REFUNDED OR PAID, 
1996-98, IN MILLIONS: + 2 EFFECTIVE TAX RATE: +0.2 Transamerica 1996-98 
PROFITS, IN MILLIONS: 2,199 TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: 
+ 5 EFFECTIVE TAX RATE: +0.2 Suiza Foods 1996-98 PROFITS, IN MILLIONS: 295 
TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: + 2 EFFECTIVE TAX RATE: 
+0.8 Navistar 1996-98 PROFITS, IN MILLIONS: 742 TOTAL TAX REFUNDED OR PAID, 
1996-98, IN MILLIONS: + 13 EFFECTIVE TAX RATE: +1.8 McKesson 1996-98 PROFITS, 
IN MILLIONS: 473 TOTAL TAX REFUNDED OR PAID, 1996-98, IN MILLIONS: + 10 
EFFECTIVE TAX RATE: +2.1 Pfizer 1996-98 PROFITS, IN MILLIONS: 3,367 TOTAL TAX 
REFUNDED OR PAID, 1996-98, IN MILLIONS: + 104 EFFECTIVE TAX RATE: +3.1 
*Purchased by Buhrmann in October 1999. (Source: Institute on Taxation and 
Economic Policy) 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 







Business; Financial Desk 
Legal Breaks Lower Some Corporate Tax Rates 
? 
10/20/2000 
Los Angeles Times 
Home Edition 
Page C-3 
Copyright 2000 / The Times Mirror Company 
WASHINGTON -- Dozens of America's most profitable companies enjoyed tax-free 
years during the 1990s largely because of legal tax breaks, an independent 
study released Thursday found. 
The report by the nonprofit Institute on Taxation and Economic Policy found 
that 250 companies paid an effective tax rate of 20.1% in 1998, down from 
22.9% just two years before. The federal income tax rate for corporations is 
supposed to be 35%. 
Of the 250 companies studied, 41 enjoyed at least one year of no income taxes 
or an actual rebate from the federal government, despite pretax profits of 
$25.8 billion from 1996 to 1998. 
If all 250 companies had paid the full 35% on $735 billion in pretax profits, 
the study estimated the total income tax would have come to $257 billion. But 
tax breaks put into law by Congress lowered those companies' tax bills by $98 
billion over the three-year period. 
Companies getting tax rebates in 1998 alone included Texaco Inc., Chevron 
Corp., PepsiCo Inc., J.P. Morgan & Co., Enron Corp. and General Motors Corp., 
the report found. 
The study's chief author, Robert S. McIntyre, said companies lower their 
taxes through such breaks as depreciation write-offs, tax credits for 
research and development and deductions they take when employees exercise 
stock options. 
The report also found that the petroleum industry paid the lowest tax rate 
from 1996 to 1998, at 12.3%, followed by electronics at 13.1%, forest and 
paper products at 13.9% and transportation at 14%. At the other end of the 
spectrum, publishing and printing companies paid 31.6%, gas and electric 
utilities paid 28.1% and retail and wholesale trade companies paid 27.6%. 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 





Oct. 19, 2000, 10:23PM
Houston Chronicle
Arena boosters tout 3 benefits 
Some question property/sales tax numbers, new development 
By ERIC BERGER 
Copyright 2000 Houston Chronicle 
Enron Field sparked the redevelopment of downtown's east side, boosters say, 
and an arena would crown the revitalization of the long-neglected area. 
A strongly pro-arena business organization, Central Houston Inc., released a 
flurry of positive economic numbers to back its contention that Enron Field 
is a boon to downtown as well as to city, county and school tax coffers, and 
that the arena would be as well. 
"There's no better way to measure the impact of sports facilities on downtown 
than to look at the one we already have," said the organization's president, 
Bob Eury, as he crooked a finger toward the ballpark. 
Eury and other boosters outlined three economic benefits to Houston they say 
are related to sports facilities: increased property tax revenues, a wealth 
of new development in the area and a boost in sales tax collected. 
But economic analysts questioned some of their conclusions. 
When Enron Field was built, nine blocks were taken off the tax rolls at a 
cost of about $284,000 in lost property taxes. 
Eury said, though, that it was not a bad trade. 
He noted that properties around the ballpark have leaped in value since the 
Enron Field project began in the mid-1990s. In turn, the annual property tax 
collected on land and buildings within four blocks of the ballpark is $2.4 
million greater now than in 1995. 
But Harris County Tax Assessor-Collector Paul Bettencourt said those figures 
are due in part to the boom in land values across downtown, including the 
central business district, since 1995. 
Bettencourt said he hoped to have an analysis finished today to determine 
whether land values around Enron Field had increased at a greater rate than 
land in the rest of downtown. 
The boosters also highlighted more than $700 million worth of private 
developments planned -- but not yet completed -- near the ballpark, including 
the $90 million, 37-story Ballpark Place Tower across Crawford Street from 
Enron Field. 
"Without a doubt, if Enron Field was not there, Ballpark Place would not be 
there," said John Holland, an executive vice president for the Trammel Crow 
Co., which expects to break ground on the project in early 2001. 
Because the arena would be built in an urban core, even academics who are 
skeptical about the economic benefits of sports stadiums agreed that spin-off 
development is likely nearby. 
But independent economists who have studied such issues, including Brad 
Humphreys, an assistant professor at the University of Maryland-Baltimore 
County, say development near a stadium usually has a negative impact on 
development and businesses in other parts of a city. 
The focus must be on the entire market, Humphreys said, not just in the 
vicinity of a sports facility. 
"Public subsidization of stadiums and arenas isn't necessarily a bad thing," 
he said. "But when they sell them as economic engines, it's just absolutely 
wrong. The research doesn't show that." 
A recent study Humphreys co-authored, which appeared in the fall 1999 issue 
of the Journal of Policy Analysis and Management, found that the presence of 
professional sports teams in a market, on average, actually reduced the 
per-capita income in those markets, compared with similar markets without 
such teams. 
Given Houston's strong economy, Eury said he does not believe downtown 
development will detract from other areas of the city, as Humphreys' studies 
have shown in other markets. 
A third major economic benefit offered Thursday was that a new arena, with 
the Houston Rockets and Houston Comets as tenants, would generate $13 million 
a year in sales tax revenues. 
About $2.7 million of that would go into local coffers, with the remainder 
going to the state, according to the study performed for Eury's group by CSL 
International, a consulting firm. 
Yet even in the absence of a new arena and both teams, many economists say a 
large portion of those expenditures would be spent in the area anyway. That 
is known as a "substitution effect." 
Instead of a family going to a game, it might go to the movies or local zoo. 
And corporations are likely to sponsor other local events out of their 
advertising budgets, the economists say. 
The CSL study did not account for this substitution effect in calculating the 
sales tax impact, said Bill Rhoda, the firm's director. 


	



Study: Dozens of corporations pay little or no income tax
By CURT ANDERSON
AP Tax Writer

10/19/2000
Associated Press Newswires
Copyright 2000. The Associated Press. All Rights Reserved.

WASHINGTON (AP) - Dozens of America's most profitable companies enjoyed 
tax-free years during the 1990s largely because of legal tax breaks, an 
independent study released Thursday found. 
The report by the nonprofit Institute on Taxation and Economic Policy found 
that 250 companies paid an effective tax rate of 20.1 percent in 1998, down 
from 22.9 percent just two years before. The federal income tax rate for 
corporations is supposed to be 35 percent.
Of the 250 companies studied, 41 enjoyed at least one year of no income taxes 
or an actual rebate from the federal government, despite pretax profits of 
$25.8 billion from 1996-98. 
If all 250 companies had paid the full 35 percent on $735 billion in pretax 
profits, the study estimated the total income tax would have come to $257 
billion. But tax breaks put into law by Congress lowered those companies' tax 
bills by $98 billion over the three-year period. 
Companies getting tax rebates in 1998 alone included Texaco, Chevron, 
Pepsico, J.P. Morgan, Enron and General Motors, the report found. 
The study's chief author, Robert S. McIntyre, said companies lower their 
taxes through such breaks as depreciation write-offs, tax credits for 
research and development and deductions they take when employees exercise 
stock options. 
"We hope our findings will encourage lawmakers to re-examine this important 
area of taxation," McIntyre said. 
The report also found that the petroleum industry paid the lowest tax rate 
from 1996-98, at 12.3 percent, followed by electronics at 13.1 percent, 
forest and paper products at 13.9 percent and transportation at 14 percent. 
At the other end of the spectrum, publishing and printing companies paid 31.6 
percent, gas and electric utilities paid 28.1 percent and retail and 
wholesale trade companies paid 27.6 percent. 
"Anyone who worries about our economy's long-term growth has to wonder why 
the tax code is being used to favor some industries and some kinds of 
investments over others, rather than letting market forces decide," McIntyre 
said. 
---- 
On the Net: 
Institute on Taxation and Economic Policy site: http://www.itepnet.org

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


US Rep Drafts Bill To Impose Windfall Tax On Pwr Companies.
By JASON LEOPOLD

10/19/2000
Dow Jones Energy Service
(Copyright (c) 2000, Dow Jones & Company, Inc.)

OF DOW JONES NEWSWIRES 
LOS ANGELES -(Dow Jones)- California's summer of soaring wholesale 
electricity prices helped boost the stock price of many energy companies in 
the third quarter.
But if U.S. Rep. Bob Filner, D-Calif., gets his way, those companies will be 
forced to pay back hundreds of millions of dollars in profit to utilities, 
customers and the government. 
Filner introduced a bill in the House of Representatives last week that would 
impose a windfall profit tax on wholesale power sold throughout the western 
U.S. 
The bill, which was referred to the House Committee on Ways and Means, may be 
discussed in December or January, according to Filner, and if he gets enough 
support by the mostly Republican caucus, companies like Enron Corp. (ENE), 
Duke Energy North America (DUK), Southern Co. (SO). Reliant Energy (REI) and 
Dynegy (DYN), would only be allowed to show a certain amount of profit and 
anything over that amount would be taxed 100%. 
Filner said the amount of profit hasn't been determined but his bill calls 
for a baseline that would be a "just and reasonable" amount of profit. 
The congressman's San Diego constituents were paying market-based electricity 
rates in the summer which resulted in triple-digit utility bills. He said 
generators are gouging California customers and need to be held responsible. 
"This is not just a problem of supply and demand," Filner told Dow Jones 
Newswires. "This is stealing. And we want our money back." 
State and federal regulators are conducting separate investigations into 
California's wholesale power crisis. The findings, expected to be complete in 
about two weeks, are aimed at determining if generators or other key players 
manipulated the state's wholesale energy market. 
At least two major energy companies are being investigated by California 
Attorney General Bill Lockyer. A high level source working on the probe with 
the Attorney General said third-quarter earnings statements will play a major 
role in finding out if generators manipulated the market. 
Their investigation isn't turning up much evidence but earnings statements 
are showing that profits are up significantly largely due to wholesale prices 
in California, the source said. 
At least one Federal Energy Regulatory Commissioner, who spoke on the 
condition of anonymity, said the wholesale electricity market in California 
will be in for a "rude awakening" when the agency completes its 
investigation. 
"There will be some serious structural changes to the market," the 
commissioner said. 
Representatives from energy companies told Dow Jones Newswires that higher 
profits weren't the result of illegal activity or manipulating the market. 
Energy Cos. Say Summer Crisis Boosted 3Q Earnings 
On Wednesday, Duke Energy, which owns and operates power plants in 
California, said in an earnings statement that third-quarter profit rose 74%, 
due in part, to high wholesale prices in California in the summer. Enron and 
several other companies reported similar third-quarter increases based on 
California's summer of skyrocketing power prices. 
The congressman doesn't want to limit the proposed windfall tax to 
California, but where generators sell power in the western U.S. 
But even Filner admits that forcing generators to refund part of their 
profits isn't getting the early support it needs to become law. 
"If the democrats were in charge I'd have this bill voted on already," Filner 
said. 
Filner said if the bill is passed some of the money would be refunded to 
consumers and utilities, the victims, as he refers to them. 
Meanwhile, he's also working on getting the House to pass a separate bill to 
roll back electricity rates in the western U.S. to pre-deregulation levels 
and he's trying to gather support for a wind power initiative. 
Regardless of the outcome, the congressman is dead set on making noise. 
"If nothing happens, I'm thinking about holding a press conference with the 
San Diego District Attorney," he said. "We'll press criminal charges against 
the energy companies." -By Jason Leopold; Dow Jones Newswires; 323-658-3874;
jason.leopold@dowjones.com

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.