February 7, 2011 3 Comments
Meant to write about this really nice Davie Leonhardt piece on corporate income taxes. A little late, but I would be remiss if I didn’t plug this in the blog. The gist:
Of the 500 big companies in the well-known Standard & Poor’s stock index, 115 paid a total corporate tax rate — both federal and otherwise — of less than 20 percent over the last five years, according to an analysis of company reports done for The New York Times by Capital IQ, a research firm. Thirty-nine of those companies paid a rate less than 10 percent.
Arguably, the United States now has a corporate tax code that’s the worst of all worlds. The official rate is higher than in almost any other country, which forces companies to devote enormous time and effort to finding loopholes. Yet the government raises less money in corporate taxes than it once did, because of all the loopholes that have been added in recent decades.
“A dirty little secret,” Richard Clarida, a Columbia University economist and former official in the Treasury Department under President George W. Bush, has said, “is that the corporate income tax used to raise a fair amount of revenue.”
Over the last five years, on the other hand, Boeing paid a total tax rate of just 4.5 percent, according to Capital IQ.Southwest Airlines paid 6.3 percent. And the list goes on:Yahoo paid 7 percent; Prudential Financial, 7.6 percent;General Electric, 14.3 percent.
And, why can’t we remedy this?
Economists have long pleaded for an overhaul of the corporate tax code, and both President Obama and Republicans now say they favor one, too. But it won’t be easy. Companies that use loopholes to avoid taxes don’t mind the current system, of course, and they have more than a few lobbyists at their disposal.
Classic example of policy that’s really hard to benefit. Those that get the loopholes currently, reap huge benefits, so fight tooth and nail to keep them. For the rest of us, we just put up with a slightly dumber and less efficient tax system, so the marginal impact isn’t worth fighting. Damn. Sometimes politics just sucks.