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Individuals Paid 8 Times More Total Tax Than Corporations Thanks To Trump Tax Cut Loopholes
Trumps tax law set a flat 21 percent corporate tax rate, increasing the taxes paid by the smallest companies and decreasing the taxes paid by all the higher-earning corporations.
By JONATHAN WOLF
at 3:15 PM
A new report from the Institute on Taxation and Economic Policy has been getting a lot of attention. The report found that for 2018, the first year in which Trumps signature Tax Cuts and Jobs Act was in effect, 91 profitable Fortune 500 companies paid no income taxes at all. None. Furthermore, across all 379 of the profitable Fortune 500 companies, the average effective tax rate was only 11.3 percent.
The low corporate tax rate, or absence of a corporate tax rate for 91 of those large companies, was in part due to the fact that Trumps tax law lowered the overall corporate tax rate (for larger companies, at least). Previously, the corporate tax rate was based on a tiered structure in which the largest and most profitable companies paid higher rates than smaller, less profitable companies. Under the structure that predated Trumps tax law, companies paid just 15 percent on their first $50,000 of income, and the corporate income tax rate increased from there, up to the highest rate bracket at 39 percent. Trumps tax law set a flat 21 percent corporate tax rate, increasing the taxes paid by the smallest companies and decreasing the taxes paid by all the higher-earning corporations.
Of course, lowering the overall corporate tax rate to 21 percent does not explain how so many very large and very profitable companies got to 11.3 percent, or to zero percent. Turns out Trumps corporate tax rate is a flat tax only in the sense that a slice of Swiss cheese is flat. While the rate doesnt go above 21 percent, it is riddled with loopholes inserted by corporate lobbyists. These loopholes tax breaks as they are more diplomatically referred to in the ITEP report allow companies with savvy lawyers and lobbyists to avoid taxes by writing off more for a variety of things, from luxury automobiles to bicycle commuting reimbursements. According to the ITEP, had the 379 profitable Fortune 500 companies actually paid the full 21 percent rate without taking advantage of loopholes, they would have collectively paid income taxes totaling $161 billion for 2018, rather than the $86.8 billion they actually paid. The savings corporations realized by building the loopholes into Trumps tax law appear to have been well worth the $6 billion spent annually on lobbying. (In addition to lobbying, corporations also spend directly on federal elections, to the tune of $2.6 billion in 2018.)
Tax Cuts And Jobs Act Increased Amount Paid By Humans, Decreased Amount Paid By Corporations
The relative tax rates of corporations and individuals are interesting, and relevant. But examining the rates for individuals versus corporations is not necessarily an apples-to-apples comparison. The raw amount of total tax dollars collected might give a more complete basis for comparison, and looking at that total, the systemic corporate tax dodge that is the Tax Cuts and Jobs Act can clearly be seen as coming at the expense of all the rest of us (actual people).
More:
https://abovethelaw.com/2019/12/individuals-paid-8-times-more-total-tax-than-corporations-thanks-to-trump-tax-cut-loopholes/?rf=1
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Individuals Paid 8 Times More Total Tax Than Corporations Thanks To Trump Tax Cut Loopholes (Original Post)
Judi Lynn
Dec 2019
OP
sinkingfeeling
(51,459 posts)1. Amazing, isn't it? Little old me paid 20,000 times more than Amazon.
ck4829
(35,077 posts)2. God... this is a joke, right?
dalton99a
(81,515 posts)3. Kick