What difference does it make if the rate is 99% if they end up paying little or nothing?

We flip-flop between marginal rates (those on paper) and effective rates (percent of income actually paid) when it suits us.

So we compare Buffet's effective rate with his secretary's marginal rate. As though that had any validity at all. Still, we act as though it's conclusive.

We like the high marginal rates on the wealthy in the '50s and '60s and blissfully claim correlation is causation while ignoring the average effective rate on high earned income back then.

It's hard to mount a valid argument. Hard to be outraged when you need to have 100 pages of 10-point text, riddled with caveats and exceptions, assumptions that you acknowledge might not be right and estimates with what you think are likely error bars, just to make a simple claim. Best to cut straight to the outrage.

We play the same game on a lot of other topics. So do they. It makes sitting on the sidelines entertaining at times. But it's also frustrating between when you listen to both sides you realize that they don't share a common frame of reference, they each have their own set of facts, and so the basic framework for actually having a dialog is pretty much lacking.

It is the same in this case. Everyone using spin. The fact is the so-called loophole of paying taxes on Corporate profits in the country where it is earned and not in the United States is not actually a loophole. It is how the rest of the developed world taxes corporations. In fact, the US does try to then tax international profits (but only if they are brought back into the US). Therefore the reason that Corporations are not paying the 35% rates has much to do with the fact that they have invested and grown outside of the US and therefore pay lower taxes in those markets.

It is very true, no matter how much liberal spin you add, that lowering US Corporate Taxes would bring a lot of that money back into the USA. And, we would not have an excuse to outsource corporate R&D like many multi-nationals now do (so that they can spend that money/profit).

It also isn't always outsourceing as is indicated by mainstream media, when jobs move overseas. It is mostly getting production and supply chain closer to the market where the goods will be sold. If you are going to produce a car for the Chinese market, you aren't going to build it in America. So that isn't really an outsourced job. When you call for IT support on a computer purchased in the US and you get someone from Timbuktoo - that is outsourcing (and of the most frustrating kind).

It is also crazy, as many on the left would like to do (including Obama), to make Corporations HQ in US pay 35% on global profits. Why? Because every US Multi-national will become an acquisition target. Why be an American Company, if when you are aquired by a Swiss based company you will only pay the 35% US rate on US profits and will be subject to the local rate in the rest of the world.

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/69xx/doc6902/11-28-corporatetax.pdf



Debt to Equity ratio of corporations is nearly always above 1 : 1 so Debt financing is weighted more heavily than equity {generally (1.5 : 1) up to (2 : 1)}.

http://thinkprogress.org/economy/2011/07/05/260535/graph-corporate-tax-second-lowest/

During negotiations regarding raising the nation’s debt limit, congressional Republicans have defended tax loopholes for corporations, claiming that America has a high corporate tax rate that is stifling economic growth and job creation. But the Center for Tax Justice (CTJ) has crunched the most recent data from the Organization for Economic Cooperation and Development (OECD), the Office of Management and Budget, and the Census Bureau, and finds that “the U.S. is already one of the least taxed countries for corporations in the developed world.”

As a share of GDP, the U.S. had the second lowest tax rate, behind only Iceland. This statistic flips on its head the often-repeated Republican charge that America has the second highest corporate tax rate in the world (which is only true on paper). In 2009, U.S. corporate taxes had fallen to only 1.3 percent of GDP, from 4 percent in 1965.



Conservatives love to point out that other OECD countries have lowered their corporate tax rates in recent years, but they conveniently ignore that “these countries have also closed corporate tax loopholes while the U.S. has expanded them.” As CAP Director for Tax and Budget Policy Michael Linden has noted, the U.S. is actually a very low-tax country across the board.

Recently, conservative commentator Bill Kristol chastised his own party for pretending that lowering the corporate tax rate is a cure-all for America’s economic woes. On Fox News Sunday, he interrupted a panelist who again tried to assert the U.S. is suffering from a high corporate tax rate: “Republicans are making a mistake if they focus on big businesses and corporate tax rates. Corporations have a ton of cash. The corporate tax rate is not killing big business in America.”
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smart and presumably productive people towards the work of tax avoidance, rather than something useful. In addition, one of big ways to avoid corporate income tax is to invest overseas with overseas profits rather than repatriating it to the US.

Finally, although corporations overall may pay a lower tax rate, there are many corporations that pay at or near the maximum -- it significantly depends on what business / industry you are in. Want to know why all IT call centers are overseas? Its not just due to the cheaper labor (although that is part of it), its that call center profits have no reasonable method of reducing income taxes.

A much simplified, more uniform tax rate which does not tax repatriated money (like the rest of the world) -- even if much lower -- would be a boon for the economy. That being said, we could probably get away with a 20-25% rate and not change total revenue / tax burden.

Today is the first I have had time to follow the links and read everything. There was just a letter in our local paper about his horseshit. I may write a letter of my own in reply.

said, "Well, now that Japan just lowered its corporate income tax rate, the U.S. has the highest corporate taxes in the world."

This is meaningless bullshit as the stated tax rates and what corporations actually pay are two totally different things.

Here is another good study done by the GAO, which found that about two-thirds of the corporations operating in the U.S. (this comprises Foreign Controlled Corporations and U.S. controlled corporations) reported NO TAXABLE INCOME in at least one of the eight years studied 1998-2005 (note they almost all did have income but by using various tax loopholes were able to reduce actual net income to zero.).

Comparison of the Reported Tax Liabilities of Foreign- and U.S.-Controlled Corporations, 1998-2005

Note: (FCDC): Foreign-controlled domestic corporations
(USCC): U.S.-controlled corporations

from the report
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"In the 8 years from 1998 through 2005, large FCDCs in a panel data set that we analyzed consisting of tax returns that were present in the SOI corporate files in every year were more likely to report no tax liability over multiple years than large USCCs in the same panel data set. As figure 2 shows, about 72 percent of FCDCs and 55 percent of USCCs reported no tax liability for at least 1 year during the 8 years. About 57 percent of FCDCs and 42 percent of USCCs reported no tax liability in multiple years—2 or more years—and about 34 percent of FCDCs and 24 percent of USCCs reported no tax liability for at least half the study period—4 or more years. A correspondingly higher percentage of USCCs reported a tax liability in all 8 years, 45 percent for USCCs and 28 percent for FCDCs."[/font]

Sometimes the GOP argument is we need to be more like the rest of the world or more like Europe in particular. Other times we need to be less the rest and Europe in particular. How is that for many in the GOP, their claim is simultaneously that the U.S. has the highest corporate tax rates yet is the least socialist and redistributive?