Sure, America has the second highest corporate tax rate among advanced economies. But few pay the headline rate, right? For instance, liberal advocacy group Citizens for Tax Justice just released a report noting that 30 U.S. corporations paid no income taxes to Uncle Sam for the years 2008-2010. (The always excellent Tax Foundation pokes several holes in that study.)
But guess what, the effective average tax rate American corporations pay is also really high, as this 2011 study notes:
We use publicly available financial statement information for 11,602 public corporations from 82 countries from 1988 to 2009 to estimate country-level effective tax rates (ETRs). We find that the location of a multinational and its subsidiaries substantially affects its worldwide ETR. Japanese firms always faced the highest ETRs. U.S. multinationals are among the highest taxed. Multinationals based in tax havens face the lowest taxes. … The findings in this study may hasten the development of U.S. tax reform by showing that U.S. multinational ETRs are among the highest in the world. Moreover, if territorial taxation further lowers the taxes on Japanese and British multinationals, then the U.S. may be forced to provide some tax relief for its multinationals to maintain some level of international tax competitiveness.
[…] the median U.S. effective tax rate is 25 percent for domestic firms and 30 percent for multinational firms vs. 21 percent (DOM) and 22 percent (MNC) for European corporations and 20 percent (DOM) and 19 percent (MNC) for Asian ones. Cut taxes now.
A) Profit is evil. Free trade is slavery. Corporations make tons of money through free trade, which means they’re evil slaveholders.
2) Taxes are the price of civilization. They’re a necessary part of life, which every good citizen should cheerfully pay. Corporations pay tons of taxes, which means they’re good, patriotic citizens.
Owwies profess both are true. Goes a long way toward explaining their behavior, don’t it?
Any discussion of business tax rates that doesn’t include the money business spends at the government’s command to carry out regulatory objectives is fraudulent on the face.
Very good point, SDN. I wonder how long ’til corporations are “encouraged” to rename their various Regulatory Affairs departments. I’m sure Commerce or USDA or FDA or EPA or OSHA or whoever will encourage them to roll those departments into Legal, so that we can all pretend the money is being spent defending themselves from consumer lawsuits.