Just starting to debunk/research - Highest corporate tax rates in the world?

[woodsprite]

In response to this pick I posted:


A TPer made this comment:
Perhaps some of this type of thing could be at least partially fixed if the US did not have the highest corporate tax rates in the western world!

Just spent my lunch hour debunking the cry from a different person that my postal service meme was just an unsourced/unverified bunch of hogwash. It was a 5-point pic that I saw here on DU. In response I posted 3 backup sources for each point (from everything from .gov sites to Times, Wash Post, PBS, Thom Hartman, etc.).

[Sentath]

1. Well

2nd on this table
http://www.kpmg.com/global/en/services/tax/tax-tools-and-resources/pages/corporate-tax-rates-table.aspx

Wikipedia says it is alot more complicated than that
http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates referencing http://taxfoundation.org/article/federal-corporate-income-tax-rates-income-years-1909-2012 (you have to scroll down in the little window in the middle)

[dionysus]

2. from what i read on DU, on paper they are very high rates, but the taxes are so easy to avoid the

effective rate is much, much lower.

[Sgent]

3. We have a horrible corporate taxation system

The effective rate is probably in line with other countries, but the way we get to that point is convoluted, counter-intuitive, takes accountants and lawyers, and creates a huge opportunity for graft and general corruption.

We have the highest corporate tax rate in the "first" world 39% + state taxes. Australia is the next closest at 28.5%

We tax worldwide income -- but only when repatriated. This means that if GM builds a factory in Europe, and they never bring the money back to the US (instead using it to invest in new European factories, etc.), they never pay US taxes on the profit. We are the only major economy that imposes taxes on worldwide income.

We tax all corporate income at the same rate (capital gains, etc.).

We tax dividends as ordinary income when distributed, but allow deductions for interest income. This encourages corporations to take on new debt rather than issuing stock.

The major tax breaks:
1) We allow all sorts of convoluted deductions for just about anything.
2) Small businesses are not required to pay corporate taxes (S Corps and LLC's avoid corporate income tax). This "small business" exception applies to billion dollar businesses.
3) If certain transactions are structured correctly, they can avoid corporate taxation completely (real estate, etc.).

The bottom line is that businesses with mostly domestic operations are hurt severely by our tax scheme, whereas multinationals probably do better than they would under a different type of taxation. The tax code encourages people to invest overseas, and keep that investment overseas.

[goldent]

4. It is misleading to say small businesses don't pay corporate taxes

because, for taxes purposes, the corporate income is treated as personal income for the owner(s) whether they receive it or not.

[Sgent]

5. Small businesses don't pay corporate taxes

Until S corps were formed in the 70's, small businesses paid corporate taxes PLUS plaid personal income taxes on distributive income.

Today, they pay personal income taxes on all corporate earnings, but they don't pay any personal income taxes on distributive income.

A dollar earned by Wal-mart will be as little as 35-52 cents after taxes by it gets to the individual investor. A dollar earned by a mom and pop retailer will be 61 cents.

[goldent]

6. Yes, that was my point

while there no be no corporate tax, you pay personal income tax on corporate income so it is just a matter of the name given to the tax.

The situation is different in the UK (lots of changes over the last few years) and there are disincentives to doing work in the US.