From Jesse’s Café Américain:

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Although the nominal US corporate tax rate of 35% seems high, and especially so given all the corporate funded propaganda promoting more tax cuts and givebacks, in fact the realized corporate rates are relatively low both in terms of historical experience and other countries. This is because of the many loopholes, subsidies, and accounting gimmicks available to its corporate citizens from the corporate friendly government.

One could make the case that the tax burden is falling disproportionately on smaller businesses and individuals that do not have the infrastructure and latitude to take advantage of the loopholes available to the bigger business lobby companies.

State and local taxes appear to be regressive. The top echelons of corporations and private individuals seem to be doing rather well for themselves.

Category: Taxes and Policy, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “The US Tax Burden Falls Disproportionately On Individuals and Small Business”

  1. Yossarian says:

    LOVE that chart on corporate taxes- the best job program that can be instituted would be to level the playing field on which small/mid-sized domestic partnerships/corps compete with multinational corporations. Perhaps lower tax rate but definitely

    That being said, I think you are missing the big picture regarding govt spending; pre-tea party and state-level austerity, total state/local/federal spending was 45% of GDP (http://www.usgovernmentspending.com/downchart_gs.php?year=1890_2012&view=1&expand=&units=p&log=linear&fy=fy12&chart=F1-fed_F0-statelocal&bar=1&stack=1&size=1366_643&title=&state=US&color=c&local=c&show=). Now we all know that much of the “growth” in the system is fake. So either govt increases it’s role in the form of permanent Keynesian exercise or we deal with the problem in a manner suggested by Charles Hugh Smith, perhaps enduring a- gasp- recession and delaying our I-Phone 10 purchase.

    But to compare only Federal taxes to the taxes of a nation like Denmark, which is the size of a small state, is disingenuous. Furthermore, it seems that spending as a % of GDP is a better measure b/c the non-taxed spending has to be borrowed and eventually paid back through taxes (or monetized-> inflation tax).

  2. streeteye says:

    headline should really be – Corporate tax burden falls disproportionately on small businesses.

    It’s trivial for a large company to make US operations lose money, derive all the revenue in foreign tax havens through oddball licensing and royalty agreements, then petition for a tax holiday to bring money home every few years. Not really worth it if you’re a corner store though.

    http://cameronkeng.com/hn-how-do-i-pull-a-google/

    If it was up to me, would abolish the corporate income tax, which is the biggest source of corruption, rent-seeking, lobbying, price distortions leading to ridiculous spending on junkets and T&E, and wasted brains on accounting and tax law.

    Just have a VAT, flattish and low income tax, tax capital gains as ordinary income but index it to inflation.

    But all the reasons I would abolish it are reasons legislators won’t, since it gives them leverage, plus the average voter assumes someone else must be paying the price.

  3. ilsm says:

    Time to pay for the $3T in the fear mongering against terror and the $10T spent for unrelated war expenses.

    Maybe a $20 a bbl toll for super tankers passing the Straits of Hormuz, secured by the US since 1973. And a $20 a ton toll for all cargo entering US ports because the US keeps the world safe for trade. Then a surcharge on all dividend paid to corporations with war profits.

    First war not pay go, now pleads to never be paid back, and cutting SS is the first step.

    Love the John Adams quote, only men with property were allowed to vote, the senate was appointed by the states’ legislatures, and liberty is not the same as freedom, nor all men created equal.

    The oligarchs forgot the “all men are created equal” immediately after the all men with no property did most of the fighting to replace King George and the British parliament with a propertied oligarchy.

    The founders are no one to hold up as example.

  4. blueoysterjoe says:

    Believe me, I buy what you’re selling. I think actual corporate tax rates are too low.

    But one thing does make me scratch my head about this picture, and I know jack-all about economics, so I thought I would ask you.

    If, overnight, corporate tax rates doubled, wouldn’t that affect individual tax liability insofar as the corporations aren’t able to pay their employees more because they have to pay more tax? Would employees not pay as much in taxes basically because they’re not getting paid as much salary? That hardly seems like a rosy situation either…

    Again, I realize I may sound like someone in the Grover Norquist camp, but I’m not, honestly. It’s a genuine question out of ignorance, not ideology.

  5. Yossarian says:

    Streeteye hit the nail on the head- with the VAT+ Flat tax+ Cap Gains tax equal to income tax (yet adjusted for inflation). However not sure I agree with no Corp tax- shouldn’t corps pay for the right to be bankruptcy remote? Or, absent a corp tax, would that be factored into their cost of capital?

    Anyway, the tax debate shouldn’t be framed as a rich poor thing as much as productive people subsidizing unproductive people, rich and poor. The biz owner who working 12 hrs a day, 360 days a year is right to resent being milked to pay for bloated budgets just as the bus driver making $40K is right to resent the bailed out investment banker making profits offshore.

  6. godot10 says:

    Eliminate corporate taxes. Implement a value-added-tax on goods and services.

  7. Permabear says:

    It is amazing to me how distorted the debate is in the American financial media. If you listen to most financial shows, you would think that corporate taxes are confiscatory. After all, as we are endlessly told ad nauseum, the U.S. has the second highest corporate taxes in the world at 35 percent. The problem is, as the commentary above elucidates, a large percentage of corporations pay little if any tax at all due to all the deductions and accounting tricks and the effective tax rate is actually very modest. There are many reasons why the national debt is such a problem today. My view is that Americans at all income levels are not paying enough taxes. Eliminating all the Bush tax cuts would go a long way to eliminating our debt problems going forward. As far as corporations go, I wouldn’t have a problem lowering the corporate tax rate, as long as all deductions and accounting tricks were eliminated, leading to a substantial increase in overall corporate tax contributions.