Corporate Taxes Are NOT Too High

It has been a repeated mantra of the Republican Party that the tax rate of United States corporations is too high. In fact, they have been claiming just in the last few days that the American corporate tax rate is the highest among all developed nations. They base this claim on the highest tax rate on the books -- and ignore the fact that almost no American corporations (if any at all) actually have to pay that rate.

The truth is shown in the charts above. In the period between 2000 and 2005, the average tax rate paid by American corporations was only about 13.4% (a smaller rate than most middle class taxpayers are charged). Instead of paying the highest corporate taxes among developed nations, the United States actually ranked 15th in the amount they paid (meaning 14 other nations made their corporations pay an actual higher rate in taxes). And the average effective tax rate for corporations has gone down since that period. In 2011, the rate had fallen to only a paltry 12.1%.

And when it comes to the total taxes by corporations (as a percentage of total GDP), it turns out the corporate taxes make up only a tiny percentage of the total -- about 2.1% in 2009 (and that is dropping also). In the past, this figure has been over 6%.

The truth is that U.S. corporations don't pay enough as a percentage of total GDP, or in the effective tax rate they pay. They are NOT overtaxed in relation to the taxes paid by corporations throughout the developed world. They are making record profits and sitting on record amounts of cash (without creating any jobs), and yet they are paying historically low effective tax rates (and some corporations pay no taxes at all, even though they have huge profits).

President Obama has said he wants to fix this (and it definitely needs to be fixed). He wants to lower the top tax rate to the upper 20's (from the current top of around 35%), and then eliminate many of the deductions, subsidies, and other tax breaks many corporations now get. I don't have a problem with lowering the top tax rate as the president wants -- as long as corporations are then forced to actually pay that rate on their massive profits (instead of the ridiculous 12.1% effective rate average that is now paid.