One Reason for the Deficit: Corporate Tax Revenue Near Historic Lows

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    Mar 03, 2011 11:37 AM GMT
    Hopefully, we can do away with the tired meme that corporations are being taxed too much and it's hurting growth and job creation.

    Center on Budget & Policy PrioritiesCorporate tax revenues are now at historical lows as a share of the economy (see graph), at a time when the nation faces deficits and debt that are expected to grow to unsustainable levels. Although the top statutory corporate tax rate is high, the average tax rate — that is, the share of profits that companies actually pay in taxes — is substantially lower because of the tax code’s many preferences (deductions, credits and other write-offs that corporations can take to reduce their taxes). Moreover, when measured as a share of the economy, U.S. corporate tax receipts are actually low compared to other developed countries. All parts of the budget and the tax code, including corporate taxes, should contribute to deficit reduction. Well-designed corporate tax reform can improve economic efficiency and help on the deficit-reduction front at the same time.


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    Mar 03, 2011 7:16 PM GMT
    http://thinkprogress.org/2011/03/02/pawlenty-bofa-taxes/FANG: Governor, today liberals are demonstrating all over the country in what CBS has called a liberal version of the Tea Party. Their main complaint is that a lot of corporations aren't paying their fair share. For example, Bank of America, in 2009 paid nothing in corporate income taxes, same with ExxonMobil, GE, and a lot of other big corporations. Do you think corporations like Bank of America should pay their fair share? What are your thoughts on that?

    PAWLENTY: Well actually the corporate tax rate in Minnesota and around the country is too high. And I think one thing we could and should do is-

    FANG: You think zero is too high with Bank of America paying nothing?

    PAWLENTY: We have the highest corporate tax rate, or one of them, in the world-

    FANG: But they use loopholes and offshore bank accounts to pay nothing.

    PAWLENTY: The things I've called for is reducing tax rates and looking at exemptions or special deals within the tax code that give certain companies privileges or benefits. I can't speak individually to any country, company would get in that regard, but I think one goal or direction is to simplify and reduce tax rates and clean out as many of the special deals as possible.

    FANG: To be clear, do you think Bank of America pays too much in taxes already?

    PAWLENTY: I don't know what Bank of America pays in taxes. I'll just say, setting aside Bank of America, the corporate tax rate in America is too high compared to our competitor nations.


    Zero is too high. BoA needs a negative number for taxes.icon_lol.gif
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    Mar 04, 2011 12:39 AM GMT
    Problem is, unless oil goes north of $250 USD/Bbl. it will remain cheaper for most businesses to outsource production to the BRIC nations and the Third World, where a combination of cheap labour, no benefits or retirement, and low taxes become far more attractive than doing business in the high tax USA (especially in CA and the East Coast).

    Limiting corporate tax to a maximum of 10% of gross receipts, with substantial incentive deductions for businesses that source all their labour and production inside the USA would do wonders for the economy, especially as fuel costs skyrocket.
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    Mar 04, 2011 12:57 AM GMT
    http://thinkprogress.org/2011/03/02/pawlenty-bofa-taxes/ExxonMobil made nearly $20 billion in profits in 2009, but paid nothing in corporate income taxes. Other extremely profitable companies GE, CitiGroup, Wells Fargo, Bank of America, and Boeing similarly have had entire quarters or years without paying corporate income taxes.


    againFANG: You think zero is too high with Bank of America paying nothing?

    PAWLENTY: We have the highest corporate tax rate, or one of them, in the world-


    which is not the case as loopholes exist. What is his trouble with the concept of zero?
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    Mar 04, 2011 1:18 AM GMT
    Well, if indeed they aren't paying ANY tax, this too is not just.

    I'm just sayingthe tax should not be exorbitant to the point that businesses opt not to do business in or with the US.

    I still think a max of 10% is fair, and perhaps a form of the AMT (alternative minimum tax) of 5% should apply to mega-cap corporations.

    I'm curious as to the context under which these corporations paid zero tax; the only common denominator I can see is that many of the above mentioned companies were recipients of TARP funds.