Putting U.S. Corporate Taxes in Perspective

Chuck Sheketoff

The U.S. corporate tax burden is smaller than average for developed countries. Corporations in the 19 member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent.

So begins a new paper by the Center on Budget and Policy Priorities (CBPP), titled Putting U.S. Corporate Taxes in Perspective.

CBPP wants readers to remember four points the next time they hear someone call for corporate tax cuts and make the claim that the U.S has the second highest top statutory tax rate among developed countries:

- The effective corporate tax rate is much lower than top statutory rate.

- The United States has plethora of generous corporate tax breaks.

- Many smaller corporations do not face the top statutory corporate tax rate.

- Corporate tax reform should broaden the base (i.e. close the loopholes) and then reduce the rate.

That's the easy to remember take home from reading the short (3 page) paper Putting U.S. Corporate Taxes in Perspective.

  • Joel H (unverified)

    In the spirit of broadening the base and reducing the rate, can I ask what you think of proposals such as the Automated Payment Transaction Tax or Rep. Chaka Fattah's Transform America Transaction Fee? I learned about these from Joel Haugen's (I'm not him) support of Rep. Fattah's proposal.

    They propose to replace the entire U.S. tax system with an anonymously collected, very low flat tax (0.3% - 1%) on all monetary transactions, with no exceptions or deductions or rebates. It would in part be a consumption/sales tax, but since consumer spending and income are a small fraction of overall transactions, and since the system would tax corporate finance of all kinds, foreign interactions with U.S. banks, and the whole underground economy, it would be very progressive -- and apart from the predictable response of a huge reduction in the number of transactions, it would automatically vastly increase the difficulty of hiding income. Of course, it's projected by its supporters to easily raise the same amount in general funds as the current tax system.

    I'm no economist, but this would obviously have far-reaching effects. The most immediate is that except for back taxes purposes, it would put the whole tax compliance industry as well as the IRS out of business, which represents tens of thousands of jobs and tens of billions of dollars. However, that also represents an equivalent decrease in costs to every other sector of the economy and the government.

    I can't decide whether this idea is crazy or brilliant. It would be nearly impossible to implement it due to massive institutional resistance, but would it be a good idea?

  • (Show?)

    I'll second Joel's question.

  • Joel H (unverified)

    My mistake -- the proposals do not exclude rebates.

  • Bill Bodden (unverified)

    They propose to replace the entire U.S. tax system with an anonymously collected, very low flat tax (0.3% - 1%) on all monetary transactions, with no exceptions or deductions or rebates.

    This looks like it has a regressive element in that the poorest of the poor will have to pay a tax at the same rate as the wealthiest. Admittedly, paying a dime on a ten-dollar purchase doesn't appear to be much, but for people in poverty who can afford toothpaste or decent food those dimes can add to a significant amount. How would they go about getting their rebates?

  • Joel H (unverified)

    I exaggerated the lack of exceptions, actually. The Fattah proposal actually makes an exception for any wages or salaries (untaxed) and cash transactions of under $500, but has the tax rate at 1%. So someone making otherwise small transactions might pay $5 or more tax on their monthly rent payment or six-monthly car insurance, but that's probably about it under his proposal. I think it also includes consideration of extending the current tax writeoffs for non-profit donations and mortgage insurance.

  • Joel H (unverified)

    It's also not obvious how these would work with FICA taxes -- I think both proposals have them eliminated, which would certainly involve major changes for Social Security and Medicare. But if those were, well, fully socialized, this would be a huge win overall for practically everyone who cares about their income tax more than their capital gains tax.

  • RW (unverified)

    "So someone making otherwise small transactions might pay $5 or more tax on their monthly rent payment or six-monthly car insurance, but that's probably about it under his proposal."

    Joel: I know it sounds like nothing over time, but you would be amazed that the quoted five dollars is a whopping sum for those living on the economic edge. Buying a stamp to mail in paperwork you had to print for a rebate is a hardship.


    There are levels of survival and there are levels of poverty where it is not a slogan to say every penny counts. And it's not romantic reservation poverty or anything we can point a bleeding liberal heart at. It's folks scrounging for work and putting effort into appearing NOT on that edge so that they CAN win the next opportunity away from one of hundreds of others just as able. It's not a unique scenario and has not been, in Oregon, since we crashed in 1999.

    Flat taxes are regressive.

    You cannot put them in "perspective" for those living from quarter to dollar, not as uncommon as you might hope. Also, not just for those you think of right away: those reduced to relying upon State support to thread together a week to week quilt.

    Believe me - there are those who work as they can get the work and live like this not just for a student's period of time... but for years of adult lives doing all they can. There are working poor with a lot of talent hoping the food bank will have enough for them to take home a three day supply.

    It's not just "welfare recipients or those on disability", but real, working adults trying to survive what has been a very long nasty decade. These are unseen people and believe me, they do all they can NOT to advertise the struggle they endure as they seek to look as good as possible and show up as strong as possible for every single chance to compete for another day.

    I swore today I was not going to post here anymore but, rather, spend ALL of my precious energy extra on activism and engagement in that which is precious to me beyond my deep ceremonial life -- the voter enfranchisement and electoral oversight venues. To study more and do more.

    I swore it not because this is not worthwhile or anything like that, it is only that I am not doing all I can do. I am loitering. This is loitering.

    I also swore not to spend anymore time reading the blog, I've so much to do in my personal life, and I think I should be more productive and less "heard".... yet I could not help but at least say a last word about how little or how much a "minimal regressive tax" really is to the many unseen ... as Chris said,Mercury one last time.

    It is amazing the survival that people are doing. There are people for whom five or ten more dollars taken from them in even a year is TOO MUCH. Not without serious opportunities and training to offset this.

    A terrible for instance, someone who is unemployed right now will give two - three dollars of state/federal benefit help for every one dollar earned, PRE-TAX, if they are lucky enough to land a temp job of some kind. It's regressive, digs a hole under the feet of those stranded in the statistics.

    It's awful, disheartening. I pray for a change.

    If ACORN or it's equivalent exists here, I hope maybe I can help educate and motivate canvassers to be deeply mission-directed and proud to get it right every single time; and for every election we have going forward, I hope I can find a place in the oversight and do that piece. IT has been a subterranean passion of mine for many years; now it's time to be quiet and go DO it.

    <h2>Hope I can keep my promise. I'd rather someone heard me talking somewhere on a front line and thought, "that sounds the way Rebecca used to write. Hmmm".</h2>

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