Pro-big business conservatives have lately been citing a statistic that the United States has among the highest corporate tax rate in the world. This statistic, however, is grossly misleading. A simple look at the real math makes clear our corporate tax rate is among the world’s lowest -- and desperately needs raising.
Big business conservatives prefer to look just at the statutory or official corporate tax rate which, yes, is higher than most industrialized countries. But you know that even though that’s the technical tax rate, corporations like Bank of America and General Electric --- despite extensive profit-making operations here in the United States --- paid zero taxes last year. That’s an actual tax rate of zero. Zilch. Nada.
In fact, given the existence of loopholes, off-shore banking and all kinds of accounting trickery, the real corporate tax rate in the United States is among the lowest in the industrial world, second only to Turkey. Don’t take my word for it. Bruce Bartlett, economics advisor to Presidents Ronald Reagan and George H.W. Bush recently wrote:
The many adjustments to income permitted by the tax code, plus alternative tax rates on the largest sources of income of the wealthy, explain why the average federal income tax rate on the 400 richest people in America was 18.11 percent in 2008, according to the Internal Revenue Service, down from 26.38 percent when these data were first calculated in 1992. Among the top 400, 7.5 percent had an average tax rate of less than 10 percent, 25 percent paid between 10 and 15 percent, and 28 percent paid between 15 and 20 percent.
In other words, the real share of the tax burden borne by big business is actually significantly less than it was in the 1950s --- when business and the middle class were both robust.
In fact today, while Wall Street profits and CEO bonuses are reaching record highs, the struggling middle class is bearing disproportionately more of the tax weight than our nation’s most successful big businesses. Whatever you think about taxes in general, the fact that you are paying more than Bank of America can’t possibly be fair.
Corporations in America benefit enormously from public structures that all of our taxes pay for.
- Companies don’t have to invent and wholly fund court systems to interpret and enforce their contracts and trade deals.
- They don’t have to build their own power plants and plant nationwide wiring for phones and the Internet.
- They don’t have to create private schools to train all their eventual employees starting in kindergarten.
Businesses in America benefit from the extraordinary initial start-up support of the United States government and the price they pay to start their successful businesses here as opposed to, say, in Libya, is taxes.
And the fact that today’s successful businesses want to drastically cut their own taxes and de-fund the infrastructure for tomorrow’s entrepreneurs and businesses is not only a-historical but un-patriotic. We’re able to succeed in America when we help America succeed.
Despite a still-sluggish economy and record unemployment, America’s big businesses are more successful than ever. Now is the time that successful corporations should be investing the most in our nation’s future success -- not paying their lowest share of taxes in decades. Just like they needed government’s help to get their businesses going, we need their help now to get our economy going again.
Sally Kohn writes frequently for FoxNews.com. She is the founder and Chief Education Officer of the Movement Vision Lab, a grassroots think tank.