Via the Huffington Post we learn that as President Obama considers lowering the corporate tax rate - in the name of reform, of course - an impediment to lowering corporate tax rates are the corporations themselves. Because President Obama wants tax cuts to be "revenue neutral" (i.e. income from taxes that is lost due to a tax cut must be made up elsewhere) it turns out that corporate America can't decide which of the highly lucrative tax loopholes it already has on the books that it wants to throw out.
So, for example, to cut the corporate tax rate down from 35% corporate America has to consider giving up one of the following tax breaks:
* Defering profits on overseas income.
* The ability to shift profits to low-tax countries.
* Tax breaks for research.
The trouble for U.S-based corporations is that individual industry's can't agree which tax break they want to give up. So, for example, a firm engaged in significant research & development (chemicals, pharmeceuticals, etc.) doesn't want to eliminate or reduce tax breaks for research, while a firm on Wall Street might have no problem with this choice.
In all cases, it should be noted that contrary to what many might claim (or believe) U.S. corporations don't pay nearly as high a tax as other corporations around the world do. To be sure, while U.S. corporations pay one of the highest marginal rates (what's on the books), their effective tax rate (what they actually pay) is not as high as it is in other countries. This helps explain why corporate taxes paid, as a percentage of national GDP, is higher in places like Japan or France than it is in the U.S. ...
You can read the entire article here.
- Mark
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