(Image was found at the blog of Montreal Simon.)Donald Trump, and his Republican accomplices in Congress, want you to believe that American corporations are forced to pay the highest taxes in the world. They are lying to you! About 20% of profitable American corporations pay no taxes at all, and the rest pay between 12.5% and 19% -- far below the 35% the Republicans want you to think they pay. And the percentage of U.S. taxes paid by corporations has dropped from 33% in 1952 to only about 10% currently.
The truth is that American corporations are NOT overtaxed. A tax cut would be good for the economy, but it should be a cut for the working and middle classes -- not for corporations (or the richest Americans).
Here is how Hunter Blair at the Economic Policy Institute describes the corporate tax issue:
As the GOP push to pass “tax reform” starts to heat up, policymakers will debate whether the corporate tax rate is too high or too low. A standard but misleading talking point for those wishing to give more tax breaks to corporations is that the United States has one of the highest statutory rates in the world at 35 percent. This is misleading because what corporations actually pay (their effective rate) is far lower. The corporate tax code is riddled with loopholes, most notably the deferral loophole which allows large multinational corporations to avoid paying their taxes indefinitely on profits they make offshore. And despite some recent claims to the contrary, a recent CBO report doesn’t overturn, but rather bolsters the research showing that corporations pay less than a 35 percent tax rate.
Due to data limitations, it’s hard to come up with one conclusive rate. But multiple studies with distinct methodologies have found effective federal corporate tax rates that range between 13 and 19 percent— far smaller than the rate corporations are supposed to pay.
Real tax reform would close the deferral loophole and ensure that large multinational corporations cannot continue to dodge the taxes they owe. Instead, the Trump administration has reversed its position on commitments to close the deferral loophole, and their most recent proposal followed congressional Republicans’ plans to institute a territorial tax system, which would no longer tax multinational corporations’ offshore profits at all. At its core, a territorial tax system makes the deferral loophole permanent.
This would cause an enormous revenue loss. In hopes that Congress would pass a repatriation tax “holiday” (as happened in 2004), large multinational corporations have used the current deferral loophole to book $2.6 trillion in profits offshore. The corporate tax base is likely to erode far more if this deferral loophole were made permanent.
The United States could benefit from real tax reform that clawed back the taxes that large multinational corporations have been dodging. Instead, the Trump administration is offering to make the deferral loophole permanent and to open up new loopholes for the rich. If policymakers wanted to help working people through tax reform, they would broaden the tax base by closing loophole and make corporations pay their fair share.
