Those Poor "Over-Taxed" Corporations

The Republicans in Congress have been repeatedly telling the American people that the reason few jobs are being created is because American corporations are overtaxed -- having to pay the highest taxes of any developed country. And if one was to just look at the tax rates listed in the tax code (and nothing else), that might seem to be true. The U.S. does have a higher top tax rate for corporations than the other countries do. But it is not quite that simple.

The truth is that American corporations actually pay less in taxes than corporations in other countries -- both as a group, and individually. The chart above shows the taxes that American corporations pay as a group -- as a percentage of each country's national Gross Domestic Product (GDP). Back in 1965, American corporations would have ranked much higher on the chart above because they paid about 4% of GDP in taxes. But that is no longer true. Currently they pay only about 1.3% of GDP, putting them nearly at the bottom of the chart (with only Iceland pay a smaller combined tax percentage). Obviously, Republican "trickle-down" economic policy has been very good for corporations -- allowing them to pay a much smaller percentage in taxes.

But surely the corporations must pay more when their individual tax rate is considered (instead of as a group against GDP). Well, NO. While the other countries may have a smaller top tax rate, the American corporations enjoy many more tax loopholes, deductions, and subsidies. This allows the individual corporations to pay a smaller effective tax rate in this country than foreign corporations have to pay in their own countries. The U.S. may have a higher top tax rate, but no corporation has to actually pay that high rate. Many corporations pay only a tiny percentage in taxes, or no taxes at all.

The corporations listed below are a perfect example of this. These are the ten American corporations with the highest profits. Note the tiny actual percentage they paid in taxes for 2011 (probably much less than you must pay if you are middle class);

1. EXXON MOBIL
profits -- $73.3 billion
tax percentage -- 2%

2. CHEVRON
profits -- $47.6 billion
tax percentage -- 4%

3. APPLE
profits -- $34.2 billion
tax percentage -- 11%

4. MICROSOFT
profits -- $28.1 billion
tax percentage -- 11%

5. JPMORGAN CHASE
profits -- $26.7 billion
tax percentage -- 14%

6. WAL-MART
profits -- $24.4 billion
tax percentage -- 19%

7. WELLS FARGO
profits -- $23.7 billion
tax percentage -- 14%

8. CONOCOPHILLIPS
profits -- $23.0 billion
tax percentage -- 8%

9. IBM
profits -- $21.0 billion
tax percentage -- 1%

10. GENERAL ELECTRIC
profits -- $20.1 billion
tax percentage -- 5%

It's pretty clear that American corporations are not paying onerous taxes -- either as a group or individually. They actually pay very little in taxes, and they are sitting on trillions of dollars in profits (billions individually). If allowing corporations to pay a tiny tax was the way to create jobs, then they should be creating those jobs right now. But it doesn't and they aren't -- because increased demand is the only real job creator (in spite of what the Republicans say).

President Obama has said he also wants to reduce taxes for corporations. If he does, then he'd better close a whole lot of loopholes, eliminate a bunch of deductions, and do away with a lot of subsidies. Otherwise, corporations would wind up paying even less than the tiny percentage they currently pay -- or nothing at all.

Personally, I don't want to hear any more whining from corporations about the high tax rates -- at least until they actually start paying those rates.