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U.S. Companies Pay Just One-Third Of The Legal Tax Rate: GAO Study

PeteEU

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U.S. Companies Pay Just One-Third Of The Legal Tax Rate: GAO Study

Profitable companies with more than $10 million in assets paid an average rate of 12.6 percent of their global profits in 2010, the latest data available, according to a new study by the Government Accountability Office, a nonpartisan congressional watchdog. That compares to the statutory corporate tax rate of 35 percent.

Direct link to the report.

http://www.gao.gov/assets/660/654957.pdf



Wonder how the US conservatives are going to explain this one away..... I am guessing they are going to target the GOA as partisan or something similar.
 

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AliHajiSheik

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Long division and averages are an impressive study tool. As long as there are deductions, the average effective tax rate will always be lower than the actual tax rate.

Or did you have a different point to make?
 

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We have one of the highest corporate tax rates in the world, it's bad for business. The real joke is someone bitching who is totally unaffected one way or the other by this.

Okay I got it wrong... they would not attack the GOA, but the messenger ... and ignore the whole article.
 

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Okay I got it wrong... they would not attack the GOA, but the messenger ... and ignore the whole article.

"I hate America, I hate America, blah blah blah." :roll:
 

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Okay I got it wrong... they would not attack the GOA, but the messenger ... and ignore the whole article.

He did not ignore the article, he pointed out a potential flaw with the study, which is that it does not compare effective rates with other countries. That would be revealing. Saying effective rate is below statutory rate is one of those "well duh" kinda things.
 

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We should drop the rate below Europe's and collect it from every business. The corporate tax system needs a lot of work.
 

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He did not ignore the article, he pointed out a potential flaw with the study, which is that it does not compare effective rates with other countries. That would be revealing. Saying effective rate is below statutory rate is one of those "well duh" kinda things.

And that is a flaw with the study that it shows that the effective rate is below the statutory rate? It is the statutory rate that is being used as an excuse by the right to lower the tax rate, and yet as the study shows companies with larger than 10 million dollar revenue play 1/3 of that rate.

You dont need to be comparative with other countries to see that this is wrong and unfair to not only the smaller and medium businesses (under 10 million in revenue), but to the consumer who do not have the ability to cut their effective tax rate by 2/3s and make up fictive losses to get money back from the government.

The point of this study, is that there is now a study that pretty much validates all the claims that non conservative right wing tax people have been saying, and totally debunk the rights mantra about "having the highest corporate tax rate in the world". Most companies dont pay any where near that rate... in fact the 12-18ish% that the study shows that they actually pay... is way under the average corporate tax rate.. hell it is almost lower than that of low tax countries like Ireland.
 

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And that is a flaw with the study that it shows that the effective rate is below the statutory rate? It is the statutory rate that is being used as an excuse by the right to lower the tax rate, and yet as the study shows companies with larger than 10 million dollar revenue play 1/3 of that rate.

You dont need to be comparative with other countries to see that this is wrong and unfair to not only the smaller and medium businesses (under 10 million in revenue), but to the consumer who do not have the ability to cut their effective tax rate by 2/3s and make up fictive losses to get money back from the government.

The point of this study, is that there is now a study that pretty much validates all the claims that non conservative right wing tax people have been saying, and totally debunk the rights mantra about "having the highest corporate tax rate in the world". Most companies dont pay any where near that rate... in fact the 12-18ish% that the study shows that they actually pay... is way under the average corporate tax rate.. hell it is almost lower than that of low tax countries like Ireland.

Statutory rate compared to other countries is what is being used as a reason. Because that is what data is available. No one is making the claim that companies pay statutory rate. So saying they do not is not debunking anything.

That you do not understand tax policy nor the arguments being made, while unsurprising, is still amusing.
 

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We should drop the rate below Europe's and collect it from every business. The corporate tax system needs a lot of work.

We need to be competitive with the global economy, so that we draw businesses back into the US. I think one of the drivers in businesses moving OCONUS is that the govt tax system makes it unattractive to stay here (obviously for those businesses that can afford to move). Levi Strauss is a good example of a company that tried to maintain some manufacturing in the US, and finally not to many years ago moved their last operation overseas. I think eventually the wage gap will close, and the US will become more attractive from that standpoint as well. But the tax structure in the US is complex and ridiculous.
 

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And that is a flaw with the study that it shows that the effective rate is below the statutory rate? It is the statutory rate that is being used as an excuse by the right to lower the tax rate, and yet as the study shows companies with larger than 10 million dollar revenue play 1/3 of that rate.

You dont need to be comparative with other countries to see that this is wrong and unfair to not only the smaller and medium businesses (under 10 million in revenue), but to the consumer who do not have the ability to cut their effective tax rate by 2/3s and make up fictive losses to get money back from the government.

The point of this study, is that there is now a study that pretty much validates all the claims that non conservative right wing tax people have been saying, and totally debunk the rights mantra about "having the highest corporate tax rate in the world". Most companies dont pay any where near that rate... in fact the 12-18ish% that the study shows that they actually pay... is way under the average corporate tax rate.. hell it is almost lower than that of low tax countries like Ireland.

True tax reform, involves more than mere tinkering with effective/marginal rates. Over 80% of the federal income tax code involves establishing legal methods to reduce net income/AGI using deductions, credits, exclusions, deferments and some very strange accounting procedures.
 

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Did they follow the law when paying their taxes? If so why would you say the did not pay the legal tax rate?

You clearly don't understand the motivation. Anything that shows that corporations aren't paying enough in taxes is fodder for the anti-corporate crowd. Instead of blaming the people who write the rules, they blame the ones who are following the rules. Naturally if they aren't following the rules there should be sanctions.
 

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Did they follow the law when paying their taxes? If so why would you say the did not pay the legal tax rate?

The key word is rate. They pay less than the rate, not less than they are legally obligated to pay. Think of it as marginal vs effective rate.
 

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The key word is rate. They pay less than the rate, not less than they are legally obligated to pay. Think of it as marginal vs effective rate.

No the key thing is not the rate at all. The key thing is did they follow the law and pay what they were legally required to do.

If the rate actually had anything to do with the subject then there would not be any need to file taxes, the governemnt would just require businesses to send in a fixed portion of sales just like they collect Medicare taxes from companies.
 

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No the key thing is not the rate at all. The key thing is did they follow the law and pay what they were legally required to do.

If the rate actually had anything to do with the subject then there would not be any need to file taxes, the governemnt would just require businesses to send in a fixed portion of sales just like they collect Medicare taxes from companies.

You are just as confused about the report as PeteEU. The report looked at the corporate tax rate and the rate that was actually paid after figuring in deductions and the like. The tax rate directly influences the effective rate, but is not the same as it. No one is saying they did not pay what they are legally obligated to pay.
 

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Rate Shmate.... Did anyone think that with a tax code of how many thousands of pages was not going to be picked and prodded by corporations (or individuals for that matter) to finds ways to pay less than the documented rate? What he need to do is abolish the IRS and institute a flat rate tax, with no deductions and no exceptions. If you can move a decimal point, you can calculate your taxes. Remove the means to cheat and you can't cheat.
 

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You are just as confused about the report as PeteEU. The report looked at the corporate tax rate and the rate that was actually paid after figuring in deductions and the like. The tax rate directly influences the effective rate, but is not the same as it. No one is saying they did not pay what they are legally obligated to pay.

No I'm not confused, the corporate tax rate has nothing to do with what percent of profit a company paid in taxes. Only idiots try to make a comparision between the two.

If there is no problem with the amount they paid because they followed the law then why was this thread started?
 

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No I'm not confused, the corporate tax rate has nothing to do with what percent of profit a company paid in taxes. Only idiots try to make a comparision between the two.

Ummmm...what do you think happens to a tax bill when rates are cut? The two items are actually directly related.

If there is no problem with the amount they paid because they followed the law then why was this thread started?

A discussion about corporate tax rates and wether they should be reduced. Of course, according to you that would not effect how much taxes businesses pay...:lamo
 

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No I'm not confused, the corporate tax rate has nothing to do with what percent of profit a company paid in taxes. Only idiots try to make a comparision between the two.

If there is no problem with the amount they paid because they followed the law then why was this thread started?

I expect to indicate that those that say that US corporate taxes are too high, using the corporate tax rate as a comparison, rather then the effective tax rate, that in reality US corporate taxes are not that high.
 

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You are just as confused about the report as PeteEU. The report looked at the corporate tax rate and the rate that was actually paid after figuring in deductions and the like. The tax rate directly influences the effective rate, but is not the same as it. No one is saying they did not pay what they are legally obligated to pay.

But the OP implied that some (GOP?) wished to lower the corporate/busniness tax rates alone, which is not true. The proposed tax reform includes many changes in the tax code which would subject more of those earnings to taxation as well.
 

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But the OP implied that some (GOP?) wished to lower the corporate/busniness tax rates alone, which is not true. The proposed tax reform includes many changes in the tax code which would subject more of those earnings to taxation as well.

Which proposed tax reform?
 

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Good for them.

I think there should be NO corporate/business tax of any kind.


Anyone that thinks that the money corporations pay on corporate tax is not passed on in higher prices/fees to their customers is (imo) dreaming.
 

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We have one of the highest corporate tax rates in the world, it's bad for business.
The official rate may be high, but the effective rate is around 12% -- or 1/3 of the official rate.

In comparison, the OECD average is around 15.4%, the G7 without the US is 18%.
 

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Levi Strauss is a good example of a company that tried to maintain some manufacturing in the US, and finally not to many years ago moved their last operation overseas.
LS started offshoring production in 1964. They stepped up foreign manufacturing not because of taxes, but because they were getting killed by the competition and had to cut costs. Nor do most companies that sell internationally need to move production abroad to cut their tax rate.
 
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