By Jason Garcia — The Orlando Sentinel
Posted: 12:00am on Apr 9, 2012; Modified: 1:38am on Apr 9, 2012
ORLANDO, Fla. — SeaWorld Parks & Entertainment had a banner year in 2011. Attendance and guest spending rose across its United States theme parks. Earnings set a company record.
But SeaWorld won't have to pay a dime in federal income tax. It will not have to pay any Florida corporate income tax, either.
Thanks to big tax deductions for capital investment and interest payments, SeaWorld's record 2011 will actually go down as a loss for tax purposes.
In fact, the Orlando-based theme-park operator has consistently reported losses to federal and state governments in the two-plus years since it was bought by the private-equity giant Blackstone Group for about $2.5 billion. And because of those accumulated accounting losses — plus continued annual deductions — analysts at the credit-ratings company Moody's predict SeaWorld will not have to pay any "meaningful cash federal income taxes for the next several years."
A spokesman for SeaWorld, whose core earnings topped $380 million last year, confirmed that the company won't have to make any income-tax payments for 2011.
"We did indeed have record financial performance in 2011, but, largely because of high tax depreciation and the debt we carry, we had no income the federal government defines as taxable," SeaWorld spokesman Fred Jacobs said. SeaWorld "operates entirely within the letter and spirit" of federal tax laws, he said.
Jacobs said SeaWorld pays "tens of millions of dollars" in other forms of federal, state and local taxes. He said SeaWorld will "likely" begin paying some federal income tax next year.
SeaWorld is a striking example, but it is far from unique. Although the United States levies one of the highest corporate-income-tax rates in the world — 35 percent, not including state taxes — many companies pay far less thanks to myriad deductions, breaks and shelters.
A study of Fortune 500 companies profitable from 2008 to 2010 found that they paid an average effective federal-tax rate of just 18.5 percent.
About one in every four of those companies paid effective rates of less than 10 percent, according to the study, which was conducted by the liberal-leaning advocacy groups Citizens for Tax Justice and the Institute on Taxation and Economic Policy. About one in every 10 achieved negative tax rates.
The disparate tax bills among businesses have fed pressure in Washington to reform the nation's corporate-tax code. President Barack Obama in February unveiled a plan to eliminate dozens of breaks but reduce the overall rate to 28 percent, though any tax changes will face fierce opposition from the businesses and industries that benefit from the current system.
The Orlando Sentinel: SeaWorld an example of why people want tax laws changed