What Do Corporations Actually Pay in Taxes?
Executive Summary
- The Right Level of Corporate Tax?
- Tax Fairness
Firms like Deloitte, KPMG, Ernst and Young and Price Waterhouse help companies engage in tax evasion. This is one way the corporate taxes are kept so low.
Introduction
Getting a solid number on the taxes paid by corporations is not easy. First of all, all the conservative sites list the published corporate rate, which is like 35%. However, only a few companies pay this rate (a few in health care for some reason). Most all companies use some loopholes or expenses to reduce their taxes paid. Conservatives sites like to keep talking about the published rate to make it seem like US business is overtaxed. Declining Corporate Tax Rate. The corporate tax rate has plunged, especially during the Bush Administration.
I have two reputable sources for this; one is the Center for Public Integrity, which puts the taxes paid by corporations at 17%, while the Center on Budget and Policy Priorities puts it at 13.4 percent. The difference seems to be that the Center for Public Integrity has a sample of just the biggest 275 companies, where as the Center on Budget and Policy seems to provide a comprehensive number.
The Right Level of Corporate Tax?
One interesting question is what is an appropriate and fair level of corporate taxation. Most conservative sources only say the lower, the better, and that any tax at all makes these companies less competitive. One important thing that is missed here is that the taxes must be paid by someone. Workers have evidently not picked up the idea from corporations to hire think tanks and pay them to point out that paying the taxes unpaid by the companies make them less competitive (and even less happy) than workers in Norway. Individual examples of fairness are never brought up by conservative sources, simply the needs of corporate power.
My logic is that first that the corporate tax rate has declined over several decades significantly without any national discussion on the topic.
Notice the graph below:
And the rate has dropped since 2008. I also want to point that when I went to go and check for the graphic from the CBO, it was removed from the CBO website.
- Corporate share of federal tax revenue has dropped by two-thirds in 60 years — from 32% in 1952 to 10% in 2013.- Americans for Tax Fairness
What is happening is that corporations are paying less and less of the taxes that fund the Federal Government.
As you can see, the issue is even more clouded by the fact that corporations pay payroll taxes which are roughly 3x their corporate income taxes. However, this includes things like pensions which are not taxes, but simply part of what attracts an employee to work for an employer. These values could simply be included as part of compensation, and probably should not be kept by the employer at all as they have a history of skimming pensions, but should be placed in private and untouchable government-insured bank accounts that. So if we compare the corporate income taxes paid to the individual income taxes, individuals pay between 3.5x and 4x what corporations do.
Tax Fairness
I think this is unfair, and a dollar of income to a company should be taxed at the same rate as a dollar of income to an employee. So I think corporate taxes should be doubled, and individual income taxes cut in half. In the area of state taxes, the story is the same. That statutory state tax rate is just a starting point for corporations. In actuality when 275 Fortune 500 companies were researched, 252 were understating their income to the states, and while the average statutory rate is 6.8 percent, they only paid 2.3 percent. Here again, corporations are only paying a minority of the state tax costs. Individuals cover far more in their property taxes, sales taxes and so on to the state.
Conclusion
So my proposal is that corporations are dumping their tax responsibility on the rest of society. Any taxes unpaid by them must be paid by individuals.
References
https://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm
https://www.ctj.org/html/corp0205.htm
https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government-0
https://www.politifact.com/punditfact/statements/2014/sep/09/eric-bolling/does-us-have-highest-corporate-tax-rate-free-world/
https://www.publicintegrity.org/investigations/broken_government/articles/entry/1052/https://www.cbpp.org/cms/?fa=view&id=784