Treasury Dept. Report Argues for Reducing Corporate Tax Rates

[babylonsister]

http://www.marketwatch.com/news/story/treasury-weighs-consequences-corporate-tax/story.aspx?guid=%7BA23FD907%2D16F9%2D4046%2DA631%2D88D26526A867%7D

Treasury examines corporate-tax rate changes
By William L. Watts, MarketWatch
Last Update: 3:59 PM ET Jul 23, 2007

WASHINGTON (MarketWatch) -- The United States has returned to the ranks of high corporate income-tax rate countries, raising questions about the nation's ability to compete in a changing global economy, the Treasury Department said in a report released ahead of a high-profile conference on the business tax code later this week.

"Maximizing economic growth requires that a tax system raise a given amount of revenue with the least possible interference in economic decisions," said the report. "Our current system for taxing businesses and multinational companies has developed in a patchwork fashion spanning decades, resulting in a web of tax rules that can harm the competitiveness of U.S. companies."

The top U.S. corporate tax rate stands at 35%. If state taxes are factored in the figure is 39%, ranking the United States second behind Japan among member nations of the Organization for Economic Cooperation and Development, the report said. The average rate for OECD countries is 31%.
But the top corporate rate is only part of the story. The average tax rate -- the ratio of corporate taxes to corporate capital income -- paid by U.S. firms is 2.2%, which is low relative to the OECD average of 3.4%.

A host of special provisions in the U.S. tax code, including long-held sacred cows such as the research and experimentation tax credit, the exclusion of interest on state and local bonds, and a number of other factors, combine to reduce the U.S. corporate tax base by as much as 25%, the report found.

Dropping all the special provisions highlighted in the report would allow the top corporate rate to fall to 27% while raising the same amount of revenue, the report found. Alternatively, the elimination of the tax breaks could allow businesses to more quickly write down the cost of new investments.

A Treasury official emphasized that the department wasn't advocating any specific proposals ahead of Thursday's all-day conference hosted by Treasury Secretary Henry Paulson.

"I don't want to pre-judge where we're going to go," Robert Carroll, deputy assistant secretary for tax analysis, told reporters. End of Story
William L. Watts is a reporter for MarketWatch.

[Sapere aude]

1. What corporations pay the highest rates?

[zonmoy]

2. basically the corporate crooks don't want to pay the pittance they

already pay to support the system of government they have already hopelessly corrupted.

[stray cat]

3. only if they close all the loopholes

What do corporations usually end up really paying...