Corporate versus personal taxes

The next time someone tries to whine about how the United States is taxing corporations to death and that the 35% tax rate is hurting the economy, point them to this.

Large, profitable U.S. corporations actually paid just a 12.6 percent effective tax rate in 2010. That’s barely a third of the 35 percent corporate rate on the books, and it’s actually lower than the median effective tax rate for middle-class Americans. The number comes from a Government Accountability Office (GAO) study intended to clarify the terms of debate as lawmakers weigh changes to the business tax code.

Most analyses of the gap between the tax rate on the books and the “effective rate” companies actually pay rely upon company financial statements, but the GAO’s work is based on actual corporate tax returns for 2010. The researchers found that large companies – those “with assets of $10 million or more” – that are profitable paid about 12.6 percent of their global income in U.S. taxes. The figure rises to 16.9 percent of global income if all foreign, state, and local taxes are factored in. Companies that took a loss for the year actually paid a higher rate than the profitable ones.

The Republican party line is, obscenely and perversely, that corporate taxes should be lowered, while taxes on the poorest Americans should go up. But with regards to taxes, large corporations in America have it great. Middle and lower income American citizens, not so much.