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Corporate tax in the US is like your personal income tax. The rate is kinda bullshit because you get so many deductions and exclusions. The term you're looking

Corporate tax in the US is like your personal income tax. The rate is kinda bullshit because you get so many deductions and exclusions. The term you're looking for is "effective tax." For US corporations it was 12.6% according to the GAO in 2010: http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/ http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r...

AnthonyMouse 11y ago
Effective tax is calculated after corporations use all of the things generally described as "loopholes" to reduce their effective tax rate. Measures to close said loopholes would obviously increase it.
snowwrestler 11y ago
But that number takes into account the capital that companies park overseas to avoid the nominal rate. So it's not a good counterargument to the idea that companies park money overseas to avoid the nominal rate. Put another way, the low effective rate doesn't disprove that 35% is too high--it demonstrates the effect of having such a high nominal rate. It would be better to have a competitive nominal rate. Then companies would move their capital based on business, not tax, reasons. For example, the U.S. tax rate provides an incentive for overseas manufacturing. If Apple moves capital from Ireland to China to invest in a new Foxconn factory, they pay a lower tax rate than if they moved the same amount of capital from Ireland to Texas to invest in a new factory there. Even if all the business costs were same between China and Texas, China would win on the tax costs. It's an impediment to bringing more manufacturing jobs back to the U.S., and a one-time tax holiday will not solve it. The rate needs to be permanently lowered. Unfortunately the people most upset about the decline of U.S. manufacturing jobs tend to see the corporate tax rate as a tool of justice, and therefore reject lowering the rate on principle.

AnthonyMouse 11y ago

Effective tax is calculated after corporations use all of the things generally described as "loopholes" to reduce their effective tax rate. Measures to close said loopholes would obviously increase it.

snowwrestler 11y ago

But that number takes into account the capital that companies park overseas to avoid the nominal rate. So it's not a good counterargument to the idea that companies park money overseas to avoid the nominal rate. Put another way, the low effective rate doesn't disprove that 35% is too high--it demonstrates the effect of having such a high nominal rate. It would be better to have a competitive nominal rate. Then companies would move their capital based on business, not tax, reasons. For example, the U.S. tax rate provides an incentive for overseas manufacturing. If Apple moves capital from Ireland to China to invest in a new Foxconn factory, they pay a lower tax rate than if they moved the same amount of capital from Ireland to Texas to invest in a new factory there. Even if all the business costs were same between China and Texas, China would win on the tax costs. It's an impediment to bringing more manufacturing jobs back to the U.S., and a one-time tax holiday will not solve it. The rate needs to be permanently lowered. Unfortunately the people most upset about the decline of U.S. manufacturing jobs tend to see the corporate tax rate as a tool of justice, and therefore reject lowering the rate on principle.