Waste Management 2008 Annual Report Download - page 119
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Please find page 119 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.(a) As discussed above, the comparison of the impacts of our investments in the facilities during the periods
presented have been significantly affected by (i) the phase-out of 69% of Section 45K tax credits in 2007 and
36% in 2006; and (ii) the expiration of our investments and the Section 45K tax credits at the end of 2007. In
addition, for the year ended December 31, 2006, our “Equity in net losses of unconsolidated entities” was
reduced by a cumulative adjustment recorded during the second quarter of 2006, which was necessary to
appropriately reflect our life-to-date obligations to fund the costs of operating the facilities and the value of our
investment. We determined that the recognition of the cumulative adjustment was not material to our financial
statements presented herein. Equity losses for our estimate of contractual obligations associated with the
facilities’ operations and associated tax benefits were also relatively lower in 2006 due to the suspension of
operations of the facilities from May 2006 to late September 2006.
(b) The benefit from income taxes attributable to the facilities includes tax credits of $3 million, $37 million and
$47 million for the years ended December 31, 2008, 2007 and 2006, respectively.
In 2006 and 2007, we also generated Section 45K tax credits through our Renewable Energy Program, under
which we develop, operate and promote the beneficial use of landfill gas. Our recorded taxes include benefits of
$13 million and $24 million for the years ended December 31, 2007 and 2006, respectively, from tax credits
generated by our landfill gas-to-energy projects.
Effective state tax rate change — During 2008, our current state tax rate increased from 5.5% to 6.0%
primarily due to changes in state law. The increase in our effective tax rate attributable to state income taxes when
comparing 2008 with 2007 and 2006 was primarily a result of this rate increase. The comparison of our effective
state tax rate during the reported periods has also been affected by return-to-accrual adjustments, which reduced our
“Provision for income taxes” in both 2007 and 2006. Our estimated effective state tax rate declined during 2006,
resulting in a net benefit of $9 million related to the revaluation of net accumulated deferred tax liabilities. Our state
estimated effective tax rate did not change in 2007; therefore no revaluation of net accumulated deferred tax
liabilities was necessary.
Canada statutory tax rate change — During 2007, the Canadian federal government enacted tax rate
reductions, which resulted in a $30 million tax benefit for the revaluation of our deferred tax balances. During
2006, both the Canadian federal government and several provinces enacted tax rate reductions. The revaluation of
our deferred tax balances for these rate changes resulted in a $20 million tax benefit for the year ended December 31,
2006. We did not have any comparable adjustments during the year ended December 31, 2008.
Repatriation of earnings in foreign subsidiaries — During 2006, we repatriated $12 million of our accumu-
lated foreign earnings, resulting in an increase in tax expense of $3 million. No foreign earnings were repatriated
during 2007 or 2008.
At December 31, 2008, remaining unremitted earnings in foreign operations were approximately $500 million,
which are considered permanently invested and, therefore, no provision for U.S. income taxes has been accrued for
these unremitted earnings.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)