The Truth Behind USA Having Highest Corporate Tax in The World.
There has been a constant debate over the high corporate tax rates in USA. President Donald Trump said in Springfield Missouri “When it comes to the business tax we are dead last”. He also argued that US needs to shrink its corporate tax rate if it wants to have any hope of competing with its economic rivals. But what is the real fact behind US corporate taxes. When we talk about taxes there are two things we should consider one is statutory tax (which are specified by law) and effective taxes (which is actually being paid). Although on papers it is true that US has highest corporate tax in the world, but that is statutory tax rate. In reality what US corporates pay is much less than that. The top federal statutory corporate income tax rate has been 35 percent since 1993, in USA. After adding state taxes, the top statutory rate is even higher. It was 39.1 percent approx in 2012. Which is highest in the world. But when you compare the effective tax rates we have 3 other countries, Argentina, Japan and United Kingdom ahead of us. According to a 2017 Congressional Budget Office report, the US’s effective corporate tax rate was 18.6 percent. Corporate share of federal tax revenue has dropped by two-thirds in 60 years — from 32% in 1952 to 10% in 2013. Corporates usually do this by misusing the loopholes in tax laws. U.S. corporations evade $90 billion a year in income taxes by shifting profits to subsidiaries. According to Citizens for Tax Justice’s survey of 288 corporations, which included most of the Fortune 500 corporations that were profitable each year from 2008 through 2012, paid an average effective federal tax rate of just 19.4% over that period. General Electric, Boeing, Priceline.com, Verizon and 22 other profitable Fortune 500 firms paid no federal income taxes from 2008 through 2012, according to Citizens for Tax Justice. 111 profitable Fortune 500 firms paid zero federal taxes in at least one of those five years. General Electric got $3.1 billion in refunds on $27.5 billion in profits from 2008 to 2012. The company paid less in federal income taxes in five years than a single American family pays in one year. All these facts reveal the truth behind high corporate tax rates in USA. So instead of decreasing tax rates government should focus on correcting the flaws in tax code to boost the economy and have a competitive edge over its economic rivals. Source: https://americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-corporate-tax-rates/