US Federal Income Taxes

[Con]

I respectfully disagree

I work for a German company and I can tell you now that the taxes they pay are disproportionate to,the us. There are very few areas where there are corporate tax havens such as Luxembourg etc but they do not actually increase the economic wealth of those countries either (see Ireland emerald Tiger). I will have to look for some examples in the economist to back this up but claiming that the us which has subsidized the majority of corporations by providing an educated workforce and a low hourly wage and Work at will environment compared to Europe has higher taxes than the large Europe countries does not take the holistic view of corporate tax payments.  Nothing these companies are doing is illegal but I would,like to have over a thousand tax accountants and lobbyists working for me to lower my taxes as well.

Con

[Con]

Some sources

From the economist 2011
The statutory federal income tax rate for big American companies is 35%. But a study by the Citizens for Tax Justice and the Institute on Taxation and Economic Policy, two Washington, DC-based think-tanks, has assessed the tax records of 280 companies from the Fortune 500 list with reliable pre-tax profit reports. Among these companies the average effective tax rate between 2008-10 was only 18.5%. While 71 companies paid over 30% of their profits in federal income tax, 30 enjoyed negative tax rates over the whole three year period. Pepco, an electricity company, had the lowest effective tax rate of -57.6%. Wells Fargo, a bank, received the biggest tax subsidy over the three years of almost $18 billion, and was one of 25 companies which took more than half of the total $223 billion subsidy claimed. In at least one of the three years, 78 firms paid no or negative tax rates, and legally-by writing off capital investments before they actually wear out (known as "accelerated depreciation"), making use of tax deductible stock options and industry-specific tax breaks, and offshore tax havens.





https://ourfuture.org/fact_sheet/taxes-myths-and-realities

The problem is not that corporations are overtaxed. In fact, compared to our competitors' corporate tax rates, the U.S. rate is low. According to the World Bank and PricewaterhouseCoopers, the United States' total corporate tax burden ranks 61st of over 100 countries. [World Bank]
When conservatives claim that the U.S. tax rate is high, they're talking about the "statutory rate." But corporations treat the statutory rate as just a guideline—they use offshore tax havens and accounting loopholes to pay much lower actual rates. The tax rate corporations actually pay is lower than the rates of economic competitors such as China (23rd highest tax rate), India (21st), and Mexico (45th). [World Bank] [PriceWaterhouseCoopers]
The U.S. collects less in corporate taxes than other wealthy countries do. Measuring tax collections as a share of GDP is a good way to put a country's tax rate in the context of its economy's size. In the last seven years, the U.S. has collected an average of 2.4 percent of its GDP in corporate taxes—less than the average 3.4 percent collected by other industrialized nations. If laws remain the same, U.S. corporate taxes will be only 1.9 percent of GDP in less than 10 years. [U.S. Treasury Department]
Corporations should pay their fair tax share. American workers increasingly carry more of the tax burden than corporations do. In the 1950s, corporate income taxes accounted for about a quarter of federal tax revenues; now they account for just one-tenth, leaving workers to pay the difference. [Economic Policy Institute]

I also recommend this book.  Its a staggering indictment of how the wealthy can game the system.
http://www.amazon.com/gp/product/B014F6X8LW/ref=dp-kindle-redirect?ie=UTF8&btkr=1

[airboy]

Con - effective tax rates are always lower than statutory tax rates.  This is true for any tax system that is progressive or has deductions.  Your argument about marginal vs. effective tax rates is a straw man argument.  My "statutory rate" on my last dollar earned for US income taxes was 28% on regular income.  My effective tax rate was 20% on all income earned.  This is normal and is part of any tax code. 

The tax policy centers you reference are very left wing.  For example, why did the data set only include 280 of the 500 US corporations?  All publically traded companies have public financial statements.  You might look at www.taxfoundation.org which has very hard data.

And you did not address the most important point.  The US taxes US corporations on income earned abroad.  Other countries do not.  This has caused a substantial exodus of large US corporate HQs over the last couple of decades.

[Con]

Most of the information is from the economist and that is definitely not left wing.  Effective rates in Europe are much higher for corporations due to the extensive social and workers compensation required there.

Also the US Corporate taxes are only harvested on overseas profits when they are repatriated back to the Us and even then its under significantly reduced percentages.  This has lead to a multitude of ruses such as the following one (also from the Economist) which allows legally these companies to avoid paying these taxes

"Perhaps the most notorious tax-reducing ruse is the "Double Irish with a Dutch sandwich". A multinational (often American) pays itself "royalties" on its intellectual property, routing the payments through an Irish-registered subsidiary, then a Dutch one, and finally another Irish subsidiary that is domiciled for tax purposes in somewhere like Bermuda."

There are many such gaps, and the reason is that the patchwork of national rules and bilateral treaties governing how much tax companies owe, and to whom, is horribly dated. It was designed for the manufacturing age. Business today is increasingly digital, services-based and driven by intangible assets, including rights to exploit intellectual property (IP), from patents to logos. These are easier than physical assets to shuffle from subsidiaries in high-tax countries to those in low-tax ones. In short, they make the old rules easier to game"

This has lead to 2 TRILLION in untaxed US corporate income that is currently stashed overseas and being shuttled around using the above legal loopholes in an obselete tax code.  Apparently GE alone according to the same Economist article has $100 billion squirreled away overseas. I actually agree with the Economist that we would be be better off shiffting to a Territorial system and only taxing companies on their earnings in the US but it is wrong to state that they are being unfairly taxed in the US in comparison tot he rest of Europe.

Further looking into this I found the article I was recvalling regarding a holistic view on taxes globally.  I have linked it below and copied a graph that shows the following summary
"Since America levies a federal tax of 35% on corporate profits (among the world's highest), this source accounts for a large proportion of its corporate-tax revenue. But European firms pay a lot of labour taxes, so the total tax take from companies is almost identical on the two sides of the Atlantic, at 40-45% of profits. According to the PwC survey, the total tax take from the corporate sector in the developed world has remained at much the same level since 2004."

http://www.economist.com/news/special-report/21596672-traditional-ways-raising-tax-do-not-work-well-globalised-world-plucking-geese

[OJsDad]

us which has subsidized the majority of corporations by providing an educated workforce

This is completely false.  The education that is provided is financed by local and state governments.  Yes, there is some money coming from the fed's, but no where near what the states and local governments are paying. 

[Con]

I should have clarified that better I was talking about federally funded R&D programs at universities


http://www.bu.edu/research/articles/funding-for-scientific-research/

If you look at university budgets state and local cover 30%, student loans are 25% (the largest component and also the majority federally funded) and Federal is 18% with the remainder being other.

https://www.washingtonpost.com/news/get-there/wp/2015/01/05/students-cover-more-of-their-public-university-tuition-now-than-state-governments/

This is a winding road from taxes corporate taxx rates to federal funding of universities and shows how interconnected all these systems are! 

Con

[BanzaiCat]

The prez added many thousands of new IRS employees a few years ago.  Maybe multiple batches IIRC, tens of thousands, since in office.

The bureaucratic bloat is only going up, as is it's tendency.  Sometimes more than others.

Lord. SO glad Obama is able to leave his stamp of idiocy. Getting rid of a federal employee is next to impossible, if they're incompetent, once they're in...sort of like a weed. (Not that all fed employees are useless; I'm just saying.)

Speaking of the O-daddy, I found this rather funny:

http://www.worldnewspolitics.com/2016/04/19/breaking-kenyan-government-releases-obamas-real-birth-certificate/

What's funny is WNP is pretty much like the Onion, but there were a lot of people getting wood when this "story" broke.  ;D

[airboy]

Con:

I think we can agree on a few things.
1] US taxes on overseas corporate profits is having perverse effects.
2] Corporate tax codes are so complex there are perverse effects.
3] US has lower labor taxes, Europe has higher labor taxes.

High European labor taxes have harmed employment.  High US corporate taxes on capital have forced US corporations to move operations abroad.  Incentives matter.  Make something more costly and you get less of it.  US has made capital more expensive.  Europe has made labor more expensive.  The results are highly predictable over time.

I also concur that services and brands are much harder to tax than physical goods.  Physical goods are less "valuable" today because of increased competition.  But if we had an actual shortage of food or water this would change very rapidly.

[Senex]

Well you should become a corporation then you wouldnt have to pay taxes either....remember corporations are people too

As someone once said, "I will believe that a corporation is a person when the state of Texas executes one."