8/6/2019 Most Americans have it exactly backwards on corporate
taxation
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Most Americans have it exactly backwards oncorporate
taxation
In March, ABC News Website reported that The top tax bracket for
U.S.
corporations stands at 35 percent, one of the highest rates in
the world. Sohow is it possible that a giant of American business,
General Electric, paidnothing in federal taxes last year, even as
it made billions in profit? the storyasked. And it then questioned
if GE CEO, Jeffrey Immelt, should be advisingthe president on
business.
The story continued, GE's success at avoiding taxes is nothing
short of extraordinary. The company earned $14.2 billion in profits
in 2010, but itpaid not a penny in taxes because the bulk of those
profits, some $9 billion,were offshore.
ABC was unable to connect the dots between the U.S. corporate
tax rate of
35 percent, which it noted is one of the highest rates in the
world, and thefact that most of GEs profits come from operations
that the company ownsoutside the U.S. Indeed, GE is a major sore
spot among those who believethat heavily taxing corporations
actually makes sense, and who complain thatsome corporations pay
little or no taxes.
Among countries with a lower corporate rate than the U.S. are
Mexico,Canada, Chile and Ireland 30, 29.5, 17, and 12.5 percent
respectively. Only
Japan, at 39.5 percent, has a higher rate than the U.S.
You might expect an organization like ABC News, that has both a
staff of professionals and the obligation to provide Americans with
accurate and
relevant information, to understand the topics it covers, like
business andtaxes. But ABC and nearly all of the major media either
do not understandthe intricacies of business and taxation, or an
honest discussion of thosetopics gets in the way of their agenda.
Its no wonder the American peopledont understand business and
taxation, being continually misinformed bythe American media.
Why do so many Americans think taxing business is a good thing?
Is it thewidely held idea that the owners of businesses that pay
little or no tax arecollecting ill-gotten gains? After all, we have
exempted 51 percent of U.S.households from paying personal income
tax, so where is the money to runthe government going to come from
if not from businesses?
Corporate taxation enthusiasts think corporations are greedy for
wanting topay less in taxes. But businesses have to keep expenses
as low as possible inorder to make a reasonable profit and keep
their doors open, and taxes areone of the expenses they need to
control, a big one.
Consider how tax rates affect a business. A company with $5
million of taxable income will pay $1,750,000 in the U.S. at 35
percent, but only$625,000 in Ireland at 12.5 percent. To
businesses, Irelands lower rate looks
