Corporate Profits And Taxes

The Republicans want Americans to believe that corporations are struggling, and a primary reason for that struggling is because they are being forced to pay an abnormally high tax rate. That is pure hogwash. The truth is that while most Americans are still struggling because of the Bush recession, corporations are not. They have not only fully recovered, but are making record profits now. In fact, American corporations are currently sitting on well over a trillion dollars in cash. The fact that very few new jobs are being created is because of a lack of demand, not a lack of money.

How have the corporations been able to record those record-breaking profits? Well, it's due to a number of factors, including laying off American workers and outsourcing American jobs to countries where they can abuse workers with abnormally low wages. But the most important factor is that they do not pay those large tax bills as the GOP would have us believe. The effective tax rate paid by American corporations last year was only a paltry 12.1% (the lowest effective tax rate in more than 40 years) -- and a much lower rate than most middle class Americans must pay.

The chart above gives the corporate story since 1952 regarding profits and taxes. Note that in 1952, corporate profits made up slightly less than 6% of the nation's total Gross Domestic Product (GDP), and corporations paid about 1/3 of the total government revenues. But today, corporate profits make up more than 10% of the nation's GDP, while paying less than 9% of government revenues. In blunt language, corporations are making much larger profits and paying much less in taxes -- and some corporations are paying nothing at all in taxes while making billions in profits.

When the truth is laid out like this it becomes very apparent that corporations don't need lower taxes -- they need to start paying a larger share of taxes. And a new poll shows that a significant majority of the American people knows this. The Politico/George Washington University Battleground Poll, taken of 1,000 random nationwide "likely" voters between December 2nd and 6th, shows that a clear majority not only wants to see higher taxes on households making more than $250,000 (60% to 38%) -- but an even larger majority would like to see corporations pay more taxes (65% to 33%).

Republicans want to cut money for ordinary Americans and lower taxes for the rich and for corporations. That is just the opposite of what most Americans want -- and it shows just how out-of-touch the GOP is with the voters.