The great corporate myth-making machine has been hard at work of late, attempting to create the false impression that U.S. corporations are increasingly uncompetitive with their foreign rivals due to the fact they pay much higher corporate taxes in the U.S. and abroad than their capitalist counterparts.
But that is one of the great myths perpetrated by corporate apologists, pundits and their politician friends. The myth is high in the pantheon of conscious falsifications their marketing machines feed the American public, right up there along with such other false notions that "business tax cuts create jobs," "free trade benefits everyone," "income inequality is due to a worker’s own low productivity contribution," "overpaid public workers are the cause of states’ budget deficits," or that "social security and medicare are going broke."
If corporate America can create and sell the idea that they pay more taxes than their offshore capitalist cousins, then they are half way home to getting their paid politicians to provide them still more corporate tax cuts—a proposal by the way that both Republicans and Obama are on record for, in their joint proposal to reduce the top corporate tax rate from 35% to 28% (Obama) or 25% (Republicans).
The message of too high corporate taxes is appearing more frequently nowadays, since actual legislation for big corporate tax cuts is now working its way through Congress. Driving the legislation are Teaparty favorites in the House of Representatives, like David Camp, head of the Ways & Means Committee, and Max Baucus, Democrat in the Senate, who is set to retire in 2014 and wants to give his business buddies yet another big cash freebie (you know Max, the guy who rode herd on that Health Insurance Corporation subsidy bill called Obamacare?).
So it’s time to debunk the "U.S. Corporations Pay Too Much Taxes" (and thus need another tax cut) myth. What follows is the first segment of a longer essay—with tables and graphs—on the same topic that will appear shortly in the December issue of ‘Z’ magazine. More segments of that essay will follow.
U.S. corporations don’t pay the nominal corporate tax rate of 35% today; they pay an effective (i.e. actual) rate of only 12%. The additional effective state-wide corporate income tax they pay amounts to only a 2% or so—not the 10% they claim. And the effective corporate tax on offshore earnings is only another 2.2% or so—not the 20% average they’ll complain.
So the total tax for U.S. corporations is barely 16%—not the 35% plus 10% (state) plus 20% (offshore) nominal tax rate. And however you cut it, the story is the same: U.S. corporations’ share of total federal tax revenues have been in freefall for decades. The share of corporate taxes as a percent of GDP and national income has halved over the decades.
And corporations since 2008 have realized record level profits during the "Obama Recovery"—while their taxes as a percent of profits since 2008 is half that of the average paid as recently as 1987-2007. Okay, more detail on all that in parts 2 and 3 to follow.
For the moment, what all the corporate tax cutting to date has produced is a mountain of corporate cash. U.S. corporations today in fact are sitting on more than $10 trillion in cash.
For example, even the U.S. business press admits today that U.S. multinational corporations have diverted more than $2 trillion to their offshore subsidiaries, to avoid paying the U.S. Corporate Income Tax.
- See more at: http://www.occupy.com/article/10-trillion-heist-debunking-myth-us-corporations-pay-too-much-taxes#sthash.5AxgcfN1.dpuf
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