Pro-taxers regularly accuse the right of peddling lies about taxes, but the repeated assertion that corporations have successfully lobbyed Congress to lower their taxes is bigger than the one Pinnochio told Gepetto.
Mike Godfrey of TaxNews.com reports that the US corporate tax system has become “unwieldy, inconsistent with world practice, and highly anti-competitive,” according to a new study by the University of Calgary:
With a statutory corporate tax rate of almost 40%, one of the world’s highest, the researchers conclude that the U.S. corporate tax system acts as a drag on economic growth and encourages business to shift investment and profits to lower-taxed jurisdictions.
“Rather than following the international trend of reducing corporate tax rates and taking steps toward a more neutral tax base, the United States follows an antiquated approach with a high rate and narrow tax breaks that undermines economic growth and job creation,” write Duanjie Chen and Jack Mintz of the University of Calgary’s School of Public Policy in a Tax and Budget bulletin for the Cato Institute.
The study compares effective corporate tax rates on new capital investments in 80 countries. It finds that the U.S., with an effective corporate tax rate of 35%, lags well behind the 80-nation average rate of just 18.2%.
While the U.S. Congress and successive administrations have long talked about cutting the US corporate tax rate, other nations have acted decisively to reduce company taxes in recent years. The study shows that of the 30 nations in the Organization for Economic Cooperation and Development (OECD), 27 cut their general corporate income tax rates since 2000, with an average cut of more than 7%. Among the 50 other nations examined in the report, 28 reduced their corporate tax rates, with an average cut also of about 7%.
There have been many studies like this one in the last decade, but their cumulative evidentiary weight still has not been able to stop those with a vested, ideological interest in scapegoating big business from insisting that corporations pay little or no income tax.
Apparently, these folks are so wedded to their pre-conceived view of the world that they ignore all evidence, regardless of how persuasive, that their preconceptions are wrong.
But it doesn’t take a missile genius to recognize that if we want to stop American businesses from exporting jobs overseas, we should make it more profitable for them to keep those jobs here.
That means lower corporate taxes.
Related Posts:
- WSJ: Time to Repeal the Corporate Income Tax
- Increase Corporate Taxes, Says Obama Chief Economic Advisor
- Ways & Means Chairman Charlie Rangel Wants to Reduce Corporate Tax Rate to 28%
- Should we Kill the Corporate Income Tax? One Man’s Argument for Assassination
- U.S. Corporate Tax Second Highest of 30 OECD Nations
- The GAO Study on Corporate Taxes and the Scapegoating of Corporations
16 responses so far ↓
1 Hious // May 14, 2010 at 5:17 pm
It goes both ways. Of course many Corps pay a good amount of tax
Yet, there are MANY corporations that do in fact pay little to no actual taxes and I think most peoples point is that TOO MANY corporations are getting away with this….not that it is EVERY corporation
I agree with them having worked for 2 big corporations that made hundreds of millions each year yet paid virtually no taxes
2 Peter // May 14, 2010 at 9:52 pm
Hious,
But they gave you a job, right?
Corporations shouldn’t pay any tax at all because their officers, employees and shareholders already pay taxes. In other words, taxing corporations is double taxation.
3 US Business Tax Burden Increased in 2010 // May 17, 2010 at 8:10 am
[...] Tax Lies: U.S. Corporations Pay Little or No Taxes [...]
4 Gorham // Jul 18, 2010 at 1:21 pm
The best way to spread the wealth, is too raise employees salaries. This could be done easier if corporations did not have to pay taxes to the government. It’s an excellent way to take money away from our inefficient government and put it into the hands of the people.
People with money tend to be more altruistic and giving.
A government with money tends to be unfocused.
5 tloop // Oct 21, 2010 at 10:16 pm
Does anybody really believe that if corporations did not have to pay taxes that they would pay higher wages to their employees? Really? Maybe the board, top management and the top shareholders. Why do the pro corporate folks believe corporations should have the same freedoms of speech and other constitutional rights as an individual but be exempt from any of the civil responsibilities that individuals have? My taxes have to pay for stadiums, increased infrastructure, making up the difference for sub living wages paid to workers and many other things that directly benefit corporations and provide little benefit to me. They want all the benefits provided by government contracts and subsidies but don’t think they should have to contribute.
6 Peter // Oct 22, 2010 at 12:40 pm
I don’t believe they’d pay higher wages, but I do believe they’d hire more workers.
7 jobe // Jul 19, 2011 at 11:39 am
Double taxation look it up.
8 Peter // Jul 20, 2011 at 9:17 pm
jobe,
What are you getting at?
9 Tom Younker // Nov 15, 2011 at 2:00 pm
Don’t you want to post a comment that points out the status of Cato Institute as a conservative think tank, paid well to promote a point of view? Don’t you want to post a comment that points out the misnomer “effective corporate tax rate of 35%”?
10 Peter // Nov 15, 2011 at 7:53 pm
Tom,
Cato is a libertarian think tank. Of course they have a particular point of view. The question isn’t whether they are biased, but rather whether they are correct.
Explain what you mean by referring to “effective corporate tax rate of 35%” as a misnomer.
11 Tom Younker // Dec 2, 2011 at 11:19 pm
The US STATUTORY corporate tax rate is 35%
“‘effective rate’ Actual rate as opposed to announced, estimated, offered, planned, or promised rate.” (businessdictionary.com)
“Although the Corporation is taxed at the high rate, it is also able to deduct just about everything it pays to conduct its business and pay its taxes on the profit not the income.”(businesstaxrecovery.com)
So, I conclude that he effective tax rate is the statutory rate minus deductions, exclusions and loopholes. Name a company that actually submitted 35% of net profits to the IRS, and then ask why they didn’t follow the General Electric model and reduce their taxes to less than zero. “The company, led by Immelt, earned $14.2 billion in profits in 2010, but it paid not a penny in taxes because the bulk of those profits, some $9 billion, were offshore. In fact, GE got a $3.2 billion tax benefit. ” (abcnews.com)
12 Peter // Dec 4, 2011 at 12:05 pm
Tom Younker,
You mean corporations get to deduct their business expenses? Horrors!
GE creates thousands of jobs. I think it should be tax exempt.
13 Tom Younker // Dec 9, 2011 at 8:18 pm
Peter:
“You mean corporations get to deduct their business expenses? Horrors!” is your response to 3 direct quotes, with sources, explaining statutory versus effective tax rate? That’s a graphic example of what you accuse the “pro-taxers” of: “Apparently, these folks are so wedded to their pre-conceived view of the world that they ignore all evidence, regardless of how persuasive, that their preconceptions are wrong”
BTW what how would adjust the tax rate when a company lays off a few thousand workers? How many jobs would a company have to create to be certified tax-free? What if a company hires in Bangladesh and lays off in Wisconsin — what rate would you assign to them. Such a can of worms!
BTW how many jobs did GE create??? What is your source?
14 Peter // Dec 9, 2011 at 11:30 pm
Tom,
I say we give job creators tax credits and charge extra taxes to people who never created a single job in their lives.
Losers hate winners. It’s a very old story. Sad, but old.
15 Tom Younker // Jan 26, 2012 at 7:46 pm
Peter:
You sound like a chatbot, not a live thinking person, when you respond to links & quotes & numbers with sources by — spitting out aphorisms and bumper sticker philosophy. I’m signing off.
16 Peter // Jan 26, 2012 at 11:04 pm
Tom,
Don’t let the door hit you in the ass on the way out.
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