U.S. Corporate Tax Rate Is 2nd Highest in Industrialized World
taxprof.typepad.com
taxprof.typepad.com
'Most Corporations Don't Pay Income Taxes' http://www.truthout.org/article/most-corporations-dont-pay-i...
'Big business must pay it's fair share' http://www.cleveland.com/opinion/index.ssf/2009/07/big_busin...
You can slice the numbers and both your point and my point turn out to be true. The questions become: what kind of society do we want? how can we build that society? and who will pay for it? It doesn't seem unreasonable to ask corporations who benefit from the infrastructure of the nation (including transportation, educational systems, public libraries, medical systems) to help pay for those benefits.
The report you cite at truthout also fairly points out that 80% of those companies paid no taxes because they didn't make any money. This doesn't take away from your point though that we have to ask what kind of society we want, but we also should be asking what's fair and also how services are provided.
First, pragmatically: the work of Friedrich Hayek shows that it's quite impossible for any top-down control mechanism to manage this stuff properly.
Second, philosophically: given the foundation that America is supposed to build on, I don't see how any group of people has the right to actively force a structure of society onto the others.
The "35% corporate tax rate" is a disingenuous business-lobby talking point. Actual effective US corporate taxes are lower than those in many industrialized European countries.
Personally, I'd be a lot more worried about getting health insurance for myself and any other employees of my startup than paying the income tax.
PS I don't think you could characterize the OECD to be part of a "disingenuous business lobby" group.
I'm not seeing anything good in that.
The statement seems to make the common assumption that economics is a zero-sum game, that somehow the harm that other nations suffer makes us better off. But this is absolutely not true.
When anyone is better off, it improves the lot of all, at least marginally. For example, a rich USA is able to provide aid to much of the rest of the world; our ailing economy might make some people smile as they think that the richies are losing out, but that just impedes our ability to aid. Even indirectly, riches provide the opportunity to research better agricultural practices, better healthcare, etc., and those things wind up benefitting all. Any country that's richer can afford to be more environmentally conscious, and that's a boon to all earthlings.
So I'm not able to take any pleasure in the idea that other nations might abuse their wealth-makers as badly as we do our own.
That's more a sign that US tax policy is not competing effectively for company domiciles than it is to say that the tax havens have it wrong. Clearly, they are banking substantial tax money (at substantially lower rates) at the expense of higher tax jurisdictions.
That's not at all clear to me.
It might be true that it would increase US government tax revenue, but
A. It's not clear that's true. There may be other reasons keeping businesses out of America (say, SarbOx for example).
B. It's not clear that increasing the revenue of the US government at the expense of the corporations (and their employees and their shareholders) is making us better off.
Re: B. You're absolutely right. I didn't think that all the way through to absolute effects. For me personally, it would certainly be negative, so I clearly blew it here. Upvoted.
Does that mean "people in favor of profits, job creation, and value creation" ?
Count me in to that lobby.
Because, frankly, what's the alternative? Thinking that we have too much entrepreneurialism, value creation, innovation, and employment, and we should tax it more so that we end up with less of it?
Corporate taxes, beyond the obviously bad levels you see at the extremes, are not as directly tied to either entrepreneurship nor unemployment rates as you would suggest (c.f. in the late 90s we had higher taxes and much lower unemployment numbers -- the reason why this was the case is easy to see in retrospect, but it is a simple and direct example of how your arguments are flawed.)
Lobbying for less regulation, lower taxes and free markets is one position. Lobbying for increased oversight of potentially damaging behavior, increased transparency in industry, reduced rent seeking and universal standards of safety is another. The right mix is somewhere in between the two extremes of course and each side can point to massive failures of the other's philosophy.
Implicitly framing one side as "people who don't like profits or jobs" is distasteful and frankly surprising to see here.
You'll not that the only way that rent seeking is possible is when the government gets its claws into the industry. Government regulation becomes the tool of those it claims to watch. It happens every time: well-meaning regulators get subverted toward the ends of business lobbyists.
Is there any reason to believe that something will suddenly turn this around so that the government is never suberted?
Fundamentally I don't disagree, and I think my comment is pretty clear. I'm not making a specific argument on where the balance of regulation ought to exist. I take issue only with the framing of the debate in terms that make it impossible to hold a conversation. No offense is meant towards anyone, I'd just prefer to keep the discussion at a bit more civil tone. We already have a reddit.
Edit: nuked two paras that didn't come out right.
I maintain that, because government is so accessible and because they carry such a big stick, the vast, vast portion of rent seeking is accomplished by subverting government regulation.
That said, I'm up-voting your reply because it is a relevant argument. I just watched a TED video with Paul Romer where he talked about the effect of societal rules on development: not just governmental laws, but broader societal norms that might prevent progress.
Well said.
Lobbying to preserve your government made monopoly, to keep in place subsidies, to restrict competition, etc. It ain't all flowers and sunshine and free markets.
It doesn't matter if it's big labor or big business or big government, they are all bad.
Your position is perfectly valid, but lets have a debate where the facts lead to a conclusion, not the other way around.
It's also a good idea to keep in mind that Europe can be a little more corporatist than the US. e.g. a German auto company might pay extra taxes in order to give their future engineers subsidized education, or to ensure that unemployment benefits are high enough that when they fire people, they can hire them back a year or two later. American companies often have much more diffused benefits.
First, how can you talk about tax rates without, er, talking about tax rates? In other words, if your only option is to say "well when I mean tax rates, I mean this other thing that's more statistically significant than what you mean" then that's really redefining terms, isn't it?
And assuming redefining terms is fine (I have no problem with it unless it's simply an excuse to shut down debate), effective tax rate is a statistical artifact, not the law. That means it's an average of all taxes paid -- both by huge megacorporations who have teams of lawyers and can locate partially overseas and by mom and pop internet startups who can't. And who do you think pays what, anyway? Once you get into statistics, methodology matters. If I remember correctly, the effective rate an average computed by total tax dollars, not a mean. That means that one Tycho who pays almost no US Taxes is going to offset about a million entrepreneurs who are having to pony up the full 35% rate.
High corporate rates, just like high income tax rates, will not hurt those already rich or making lots of money. The people it hurts are the folks trying to transition, trying to grow. The ones where five or ten percent make a huge difference.
The frustrating part about this effective tax rate discussion is that it presents a problem from which no further discussion is possible. I.e., suppose the real tax rate is 50% and the effective tax rate is 20%. Does that mean you should increase taxes by another 10%? Would that make the effective rate 30%? Of course not -- that's mushy thinking. But yet what are you supposed to do with this effective rate data? It seems to exist for no other purpose than to end debate on the effects of tax rates on corporations.
And, surely you're aware that the "35% corporate tax rate" number is a bit of a statistical creation as well? We have a progressive tax code in the US, so small businesses that make less money are taxed at a lower rate. In no way is it accurate to argue that entrepreneurs making under $100k pay 35% federal income tax -- even if we ignore deductions, credits, and everything else.
Indeed, according to the Small Business Administration, sole proprietorships -- i.e. the mom & pops -- faced the lowest effective tax rate of any group last year: 13.3%. I'm not a statistician, but I don't think it's just the Tycos of the world skewing the stats.
I can't argue with the fact that the tax code is so complex as to make discussion useless, but I would like to point out that discussion has to take place around something. And I wouldn't pick average dollars paid as that something -- seems like a silly number.
Where do we go from here? A detailed discussion on survey methodology? Cherry-picking authoritative sources? A discussion about how early-stage businesses lose a lot of money? Or how income can be deferred using various accounting techniques?
But you see, the meme has accomplished its goal: we are no longer talking about what the law says about what corporations should pay, which is the only high-level, simple concept that we have a chance to reach some conclusions about. After this its all just down-in-the-weeds, wonkish stuff.
So no thanks.