The U.S. Has a Low Corporate Tax

The U.S. Has a Low Corporate Tax: Don’t Believe the Hype about Japan’s Corporate Tax Rate Reduction

America has one of the lowest corporate income taxes of any developed country, but you wouldn’t know it given the hysteria of corporate lobbying outfits like the Business Roundtable. They say that because Japan lowered its corporate tax rate by a few percentage points on April 1, the U.S. now has the most burdensome corporate tax in the world.

The problem with this argument is that large, profitable U.S. corporations only pay about half of the 35 percent corporate tax rate on average, and most U.S. multinational corporations actually pay higher taxes in other countries. So the large majority of Americans who tell pollsters that they want U.S. corporations to pay more in taxes are onto something.

Large Profitable Corporations Paying 18.5 Percent on Average, Some Pay Nothing

Citizens for Tax Justice recently examined 280 Fortune 500 companies that were profitable each year from 2008 through 2010, and found that their average effective U.S. tax rate was just 18.5 percent over that three-year period.[1]
In other words, their effective tax rate,which is simply the percentage In other words, their effective tax rate, which is simply the percentage of U.S. profits paid in federal corporate income taxes, is only about half the statutory federal corporate tax rate of 35 percent, thanks to the many tax loopholes these companies enjoy.

Thirty of the corporations (including GE, Boeing, Wells Fargo and others) paid nothing in federal corporate income taxes over the 2008-2010 period.

You might think that these companies simply had some unusual circumstances during the years we examined, but we find similar tax dodging when we look at previous years and the new data for 2011.

For example, GE’s effective tax rate for the 2002-2011 period (the percentage of U.S. profits it paid in federal corporate income taxes over that decade) was just 2.3 percent.[2] Boeing’s effective federal tax rate over those ten years was negative 6.5 percent, (meaning the IRS is actually boosting Boeing’s profits rather than collecting a share of them).[3]
http://ctj.org/ctjreports/2012/04/the_us_has_a_low_corporate_tax.php

 

You can't get more supply-side than that. And yet, where are all the jobs that tinkle-down is supposed to create? Supply-side arguably works best in the imagination. Real world, not so much.