Corporate taxes

Politicians are arguing, among other things, about whether US corporations get taxed enough. As usual, there is little factual content to the argument - just a lot of emotional appeals. So what are the real facts? A little web research reveals two interesting facts:

1. US corporate tax rates, at 39%, are among the highest in the world. In 2011 among the OEDC (developed) countries only Japan's corporate tax rate is higher

2. Despite that, the proportion of GDP that US corporations pay in federal tax has been dropping for years, as the following chart from the Huffington Post shows:

The reason for the drop in corporate tax revenue, of course, is the myriad special interest deals, loopholes, deductions, exemptions, etc woven into the tax law by Congress over the years.

As I noted in a post months ago, General Electric paid no (zero, nada!) taxes in 2010, on $14.2 billion in profits in 2010. In fact, they got back $3.2 BILLION in government tax credits. Similarly, Exxon Mobile paid no federal taxes in 2009 on $35 BILLION in profits. And so on and so on.....

Clearly we don't need to raise corporate tax rates more (tax the greedy rich corporations), much as liberals like to make that populist argument. Clearly we need only reform the tax law to eliminate all the special corporate exemptions in the present tax law. Then we could probably afford to lower corporate tax rates to a level more in line with our worldwide competitors.