Stories this morning reveal that the Obama Administration, like every other political arm, wants to lower the amount that corporations pay in taxes. Everyone decries our 35% statutory corporate tax rate as being one of the highest in the world. I could understand that argument, if it was true and that was really the tax rate that corporations actually paid, but…
Here’s the headline from WSJ a few days ago;
With Tax Break, Corporate Rate Is Lowest in Decades “Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30, according to the Congressional Budget Office. That’s the lowest level since at least 1972. And well below the 25.6% companies paid on average from 1987 to 2008.”
So, for the last three decades or so actual corporate taxes ran about 10% below the statutory rate (not the highest in the world) and last year, they fell to a 40-year low. Does this sound like they need more, rather than fewer, tax breaks? This is still one of my favorite graphs although it’s getting a bit dated. It shows how corporate taxes have been falling for the last 50 years, all the while the shortfall is being made up by you and I paying higher taxes for Social Security and payroll taxes. Income taxes are actually fairly stable, running both sides of about an 8% average of GDP, but corporations continue to pay less and less with each passing year due to their extensive lobbying campaign. Corporate profits and corporate pay are at all time highs and they continue to push for lower taxes at the expense of you and I.
With corporate taxes currently at an all-time low and the economy in the toilet, would you be happy paying 12% tax on your income? Or, 25% for that matter? Do corporations really need another 7% chopped off of their already puny taxes at our expense? The sad thing is that they will probably get their cut because this is an election year and corporate money finances our political process. Can you say “Public campaign financing”?