One of the mantras we hear from the right often is that business taxes are too high in the United States and it chases corporations overseas. And now, a word from reality. A new GAO study finds that the average corporate tax rate is less than 13%, or about 1/3 of the marginal corporate tax rate.
The biggest, most profitable American companies paid only a fraction of the taxes they would owe under the official corporate rate, according to a study released on Monday by the Government Accountability Office.
Using allowed deductions and legal loopholes, large corporations enjoyed a 12.6 percent tax rate far below the 35 percent tax that is the statutory rate imposed by the federal government on corporate profits…
The report found that even when foreign, state, and local taxes were included, the tax rate of large companies rose only to 16.9 percent of total income, still well below the official 35 percent.
“Some U.S. multinational corporations like to complain about the U.S. 35 percent statutory tax rate, but what they don’t like to admit is that hardly any of them pay anything close to it,” Mr. Levin said in a statement. “The big gap between the U.S. statutory tax rate and what large, profitable U.S. corporations actually pay is due in large part to the unjustified loopholes and gimmicks that riddle our tax code.”
60 years ago, corporate taxes made up 32% of the federal budget; today it’s 9%, or less than 1/4 the amount of tax paid by individual taxpayers. That’s why we are 32nd out of 34 OECD countries in business taxes. And yet we spend more on defense than the other 33 nations combined. We want an empire but we don’t want to pay for it, which is the root of our fiscal problems. Thus, we start wars that cost trillions of dollars while simultaneously cutting taxes, in effect writing a huge IOU to ourselves that we have to pay back with interest.