Taxing Issues

Taxing Issues

by digby

If you have a few minutes, listen to this excellent debate between Sam Sedar and Brietbart editor John Nolte about tax policy. It's a good one.

Also read this excellent post by Dday about corporate tax rates:
While conservatives focus on the nominal corporate tax rate of 35%, that’s almost a meaningless number compared to the effective tax rate, AKA what corporations actually pay to the government. And that tax rate is among the lowest in the industrialized world.

But I suppose we need yet another article about this. So David Kocieniewski writes it again, with the excellent topic heading “But Nobody Pays That”:

By taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.

The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals “world leaders in tax avoidance,” according to Edward D. Kleinbard, a professor at the University of Southern California who was head of the Congressional joint committee on taxes. This has profound implications for businesses, the economy and the federal budget.

I would argue that, when 55% of US companies pay no federal income tax during at least one year out of seven, more than “some” American companies pay less than their competitors abroad. I’d go with “most.”

The best way to judge the efficiency of the corporate tax code is to look at results, and in the US, corporate tax topped out at 1.3% of GDP last year. Most industrialized countries collect DOUBLE that, around 2.5% of GDP. The corporate tax rate is a useless parameter in the face of these numbers.

Obviously, this whole notion that American corporations are the most highly taxed in the world is a lie. And when it comes to this topic in the context of deficit reduction, politicians are incoherent: they say insist that eliminating "loopholes" will raise revenue to close the deficit while simultaneously saying that we must lower corporate tax rates because our corporations can't compete . But unless corporations are hiring high school kids as accountants these days, they aren't going to be fooled into believing that they are paying less just because their rates have been lowered, and presumably "compete" out of sheer determination. And it's very difficult to believe that the corporate lackeys in the US Congress are serious about cutting the kind of loopholes that will result in corporations paying more. I'm fairly sure that the "loopholes" that raise revenue (if there are any) will mostly be the kind that falls on average people, not the Big Money Boyz.

American corporations and individuals do not pay higher taxes than any other industrialized country in the world. They just do not believe they should have to pay any taxes at all.