Corporate Tax Revenues Nearing Historic Lows As A Percentage Of GDP, Report Says

Even as the federal deficit has ballooned, U.S. corporations are paying lower tax bills than ever before, according to one measure.

That's the takeaway from a new report by the Center on Budget and Policy Priorities dissecting the tax structures of corporations, which CBPP Director Chuck Marr says are now paying taxes at "historical lows as a share of the [total] economy."

Marr points to a basic discrepancy: While the U.S.'s top corporate tax rate of 35 percent is one of the highest in the world, the amount corporations actually end up forking over to the government is much lower, sometime as low as 4 percent. This is due to a dizzying number of deductions, write-offs, and other accounting tricks that allow corporations to legally reduce their tax burden.

In 2007, the report notes, the Treasury estimated federal government had missed an opportunity to collect $1.2 trillion due to various corporate tax expenditures over the previous decade.

As New York Times columnist David Leonhardt columnist recently put it, a company like General Electric is, indeed, "expert at avoiding taxes."

Using statistics from the Office of Management and Budget, CBPP created this graph, mapping total collected corporate taxes as a percentage of the overall U.S. economy:

The report also notes that the current tax code is "industry-specific," meaning that some industries benefit more than others. Backing up that claim is the Congressional Budget Office, which estimates the effective marginal corporate-level tax rate to range from "29 percent on computer equipment to a negative 2.2 percent on petroleum and natural-gas structures."

The financial services industry is said to be taxed at 16.5%. The below graph shows how tax rates fluctuate widely by sector:

Finally, the report takes aim at the rapidly growing number of large businesses that are using their status as "S corporations, partnerships, limited liability companies, and sole proprietorships" to save on taxes. Here's CBPP's chart on this trend:

You can read the entire report here.

Comments

[Damothedevo]

03:26 AM on 03/30/2011

This is surprising, I didn't expect this at all. I still get my check though right?

[Dave Harpe]

12:41 PM on 03/29/2011

Just more proof that if we tax the rich and end the wars, we will have more than enough money to pay for everything a government needs to do in a civilized society. Or we can continue in the direction we are going now, and end up in a jungle where only the most fortunate have any chance of survival.

[builderman55]

11:14 AM on 03/07/2011

And Pawlenty thinks that corporate taxes are STILL too high. He will not be happy until we start subsidizing corporate America on a regular basis, and not just during financial calamities, instead of subsidizing things like education, public transit etc. Remember the lesson from Reagan--the more we give the rich, the more will trickle down to us in the Middle Class...

[way2old]

01:23 AM on 03/29/2011

Its way beyond that...........the goal of conservatives is an all new country.....CSA......Corporate States of America and one party.....the Republican Party.

Is it odd all the Republicans at the Federal and State levels are all saying and doing the same thing.....acting on only budget items that crush the middle class, small business, main street and jobs....while favoring corporate America.

Proof.........check this ten minute video from a recent Rachel shows which documents all this in the state of Michigan, but it could have been in any state with a new Republican Govenor.

http://www­.youtube.c­om/watch?v­=53BkWfyb9­n0

Dont miss the last 5 minutes.........pass it along. It is critical we all understand the Republican goal........CSA..........CSA.........CSA

[Damothedevo]

03:23 AM on 03/30/2011

I think Reagan meant in the form of urine on our heads.

[gussom]

08:28 AM on 03/07/2011

If anybody thinks this is good for businesses in the long term history shows that tis different. If people as a component of economic activity become sidelined in favor of capital, labour will move.

[mhellie]

04:30 PM on 03/04/2011

I have investments like many other middle class folks who actually benefit when corporations make big profits, so I'm not too upset about it. Not sure why so many get bent out of shape.

[1dabut1]

10:26 AM on 03/05/2011

because im paying for those profits not the big business

[GJCO-JMH]

10:57 AM on 03/06/2011

How? The vast majority of companies on Wall Street did not receive bailouts and GM shareholders were big losers in that deal. Small "investors" who have been contributing their own money, not yours, to their own 401Ks, IRAs etc. for years. Those folks lost their own money, not yours, in the crash of '08. As Wall Street has recovered, those people are recovering their own money, not yours.

Example: 94% of all household's in America own at least one microwave and contributed to 'big business' with every purchase. The relatively small price paid for a major convenience goes to the manufacturer and all their employees and shareholders, the trucking company, the store, the sales clerk and janitor. Is that a problem?

[builderman55]

11:18 AM on 03/07/2011

Because Wall Street and corporations receive all kinds of "subsidies" from taxpayers, which they then milk for highly risky investments, then crash the global economy, then demand taxpayer bailouts, then pay themselves obscene bonuses with those taxpayer bailouts. That's why...

[mhellie]

01:56 PM on 03/07/2011

Oh you mean like the Governments own Fannie mae and Freddie mac? got it.

[hamsteronwheel]

02:34 PM on 03/04/2011

we are all hamsters on neocon "financially engineered" wheels...

"As New York Times columnist David Leonhardt columnist recently put it, a company like General Electric is, indeed, "expert at avoiding taxes.""

GE is also a major EXPORTER OF JOBS which of course is why Obama appointed immelt, NY fed neocon BOD member, jamie dimon whose lackey billy daley is now Obama's Chief of Staff is one as well, to steer US economic policy to the specific benefits of neocons, while banksters sit on TRILLIONS in cash, as our country burns.

ironic insult of all ironic insults he appointed immelt as his lead economic policy "Jobs Czar"

remember it was the NY fed under the guidance of timmy geithner who caused our current 2nd Great Depression that has the banksters lighting their cigars with the TRILLIONS they are investing in China and other countries.

almost 2 years ago Gretchen Morgenson of the NY Times detailed timmy geithner's ny fed incestuous cabal that caused our current 2nd Great Depression where ny fed board members steered Trillions in bailout dollars and other fed "special" "monetary easing" programs to their corporations. immelt was a key player.

4/26/09 NY Times article "Geithner, Member and Overseer of Finance Club" By JO BECKER and GRETCHEN MORGENSON and the accompanying graphic "Mr. Geithner’s World." research how they control the fed.

http://www.nytimes.com/2009/04/27/business/27geithner.html?_r=1

that article is almost two years old and NOTHING has changed.

[GJCO-JMH]

12:31 PM on 03/06/2011

You are correct, except for your first assumption that government/Fed/corporate cronyism is any kind of "neocon" deal. Quite obviously, the problem has been growing and being inherited from administration to administration for the last Century.

As long as people keep buying into the partisan bickering and lies as if one party or the other is to blame, nothing will change. And as long as people keep demanding more and more from the government, nothing will change. Raising taxes to help pay for the mess is not the answer. It's really just a shell game anyway.

The problem does not lie with big business, or the banks, or the government. It lies with big business and big banks and big government playing crony capitalism with tax dollars. We all benefit from "big business" and the banks doing well, but NOT when Billions of tax dollars are flying out the window in the form of subsidies, pork and USAID that never reaches the intended recipients, AND NOT when businesses are being hamstrung with burdensome government regs (or overly-expensive and restrictive Union contracts) OR NOT when there's a RIVER of cash flowing through the revolving door between K Street special interests and Politicians.

The answer lies in cutting those ties and stop demanding or expecting that an ever-growing, tax-guzzling federal bureaucracy can or will "manage" every corner of the economy, every corner of society, and every corner of our private lives.

[GoldsteinD]

01:55 PM on 03/04/2011

reason: foremost is that although the rates are high there are tons of loopholes

[1dabut1]

10:35 AM on 03/05/2011

everybody forgets that a lot of these countries that don't charge high taxes don't have a big military to pay for, the American tax payer pays for their protection, alot of the money that these corporations make is money that our politicians send to other countries as aid, via our pocket books.

[alan2a]

12:12 PM on 03/04/2011

This article is UnAmerican. We all know that it is inappropriate to tax corporations or anybody who makes in excess of say 500k a year. These are the elites of our society. God must love them because they are rich and they make money. Every Christian knows that the teaching of the bible says soak the poor and enhance the rich. Just ask any Republican.

[GJCO-JMH]

12:55 PM on 03/06/2011

Oh please. Open your eyes. I'm neither defending nor decrying anyone who's made their own fortune legally, but if *you're* going to be outraged at anyone who has, you're missing half the equation by pointing fingers only at Republicans. Last I checked, 7 out of 10 of the "richest" members of Congress were Dems, and neither Party has a corner on members being involved in shady financial dealings.

I'm also not a Bible quoter, but last I checked the Bible tells us it is not for us to judge anyone else. And conventional wisdom says resentment will destroy you, not "them". But if you really want to wallow in it and point fingers at groups of people, it is a *fact* that "conservatives", in general, are more generous in their charitable giving than liberals, in general.

[NickTAZ]

11:20 AM on 03/04/2011

Digitalize all money, eliminate all deductions, eliminate all current taxes, and tax every transaction at a flat rate, including income (from any source), cash gifts, purchases at stores, etc. This eliminates tax evasion by those who deal only in cash (which is a HUGE swath of people). True, this makes all people, even the poor, subject to taxation, but all that means is that taxation just needs to at a high enough level to provide any additional services that the lower class needs (food aid, housing aid, day care aid, medical aid, etc).

Digital money can also be tied to social security numbers solving the problem of business' hiring illegal immigrants. (bear in mind that the banks currently hold most of your money digitally, so fears about "computer hackers" are relatively insignificant)

Unlike the value added tax, this tax cannot be avoided by purchasing items internationally-- any money that leaves an account, regardless of where it goes, is subject to the tax.

Since every service and product is subject to this tax equally, supply & demand curves would prevent companies from "passing the tax onto the consumer."

Efficiency would increase as people search for ways to get the same results with as few transactions as possible.

I'm not a genius, so I'm looking for the potential flaws of this idea to make it better. Thanks for the help!

[GJCO-JMH]

01:24 PM on 03/04/2011

"bear in mind that the banks currently hold most of your money digitally, so fears about "computer hackers" are relatively insignific­ant"

Totally backwards. The hackers are always a step ahead, and the fact that financial assets are digitized makes it all the more easy for the hackers. Cyber-terrorism already exists. Security experts predict that 'just' a few strategic attacks on the power grid will bring this country to its knees.

[NickTAZ]

01:31 PM on 03/04/2011

You say this, but when has it ever happen that people have lost large sums of money due to hackers? Super-rich banks just hirer super-smart hacker to work FOR them rather than against them, and we've seen no problems yet. And if there will be problems in the future, like I've said, a vast majority of all our money is already digital which means a full conversion would have little effect.

[GJCO-JMH]

01:39 PM on 03/04/2011

Your plan is basically government control of all private property and has the same fatal flaws as every attempt at Communism.... Do the math.... and you'll find tyranny.

[NickTAZ]

08:42 PM on 03/05/2011

all government is tyranny from a perspective. And no, people would still own their own property and money, but would not have the option to break the law anymore.

[yougg]

09:32 AM on 03/04/2011

Corporations need to pay their fair share of taxes. The government has no problem coming after the little fish but doesn't go after the big fish. This is discrimination.

[colonelsun68]

04:14 PM on 03/03/2011

According to Tim Pawlenty these poor, abused corporations are being punished with taxes, when in fact they often pay none at all. They need to be relieved of the burden of existing in a country that let's them rake in billions in profits. Since the Supreme Court considers them "persons", I suggest they are taxed at the same rates the rest of us pay. And if they are headquartered off-shore, they should pay more in taxes and lose all rights of "citizenship", including access to our court system. Suck on that, Halliburton!

[pinko70]

04:53 PM on 03/03/2011

hey genius, if corporations were reporting billions in profits, they would be paying taxes on them. If a corporation doesnt make a profit, it doesnt pay taxes. Corporations are taxed at a higher rate than you are (35%), assuming you are a typical low wage or unemployed progressive.

If you make no money, do you pay taxes? Do you even understand how taxation works?

[TParrish]

05:00 PM on 03/03/2011

Hey! A guy who likes numbers! Here are some...

Bush Tax-Cuts Were Heavily Weighted to the TOP 20%:

Bottom 20% - Share of Tax Liability lowered by: 0.2%

Second 20% - Share of Tax Liability lowered by: 0.4%

Third 20% - Share of Tax Liability lower by: 0.7%

Forth 20% - Share of Tax Liability lowered by 1%

Top 20% - Share of Tax Liability lowered by: 2.3%

So...

Top 20% Received 11.5 TIMES more tax relief than the Bottom 20%
Top 20% Received 5.7 TIMES more tax relief than the Second 20%
Top 20% Received 3.2 TIMES more tax relief than the Third 20%
Top 20% Received 2.3 TIMES more tax relief than the Fourth 20%

This was while the average income of the top 20% shot way
up, making the cuts even more beneficial for them.

If we had cut taxes for everybody BUT the top 20%, we would have had:

$114.6-billion a year more revenue.

Over seven years, it would have lowered the debt by: $802-billion.

http://www.taxfoundation.org/news/show/323.html

[devondx]

05:04 PM on 03/03/2011

.... if corporatio­ns were reporting billions in profits, they would be paying taxes on them.
=================================
.....LOL !!!....that's hilarious....!!

[PeterNPaul]

03:56 PM on 03/03/2011

Corporations don't pay taxes, their customers do.

[devondx]

05:08 PM on 03/03/2011

...the gop doesn't believe in the demand aspect of supply and demand.....

they also seem to think that prices are set and jobs created according to the kindness

of rich people vs. what prices the market will bear and what demand for goods and

services exist....

[AJ4A]

03:44 PM on 03/03/2011

Low corporate taxes are not the problem in America. They keep us competitive in a global market and keep jobs in America and in your home states. If corporate taxes go up, jobs go to other countries where the corporation can maximize their profitablility for their shareholders.

As for all the comments regarding lower income americans bearing the brunt of taxes....approximately 50% of americans did not even pay taxes last year. 75% of taxes in america are paid by approximately the wealthiest 17% of people. Just remember these calls for feeding on the rich when there are no more rich people to tax due to "social justice", when there are no jobs because there is no pot of gold at the end of the rainbow for hardworking visionary americans and when the US reduced to a soialist state.

.

[devondx]

05:10 PM on 03/03/2011

lowest US tax rates in almost a 100 years,,,,but just keep whining and blaming teachers...

[AJ4A]

05:44 PM on 03/03/2011

Who's complaining? Lol, my wife is a teacher. Go away.

[JB1977]

05:19 PM on 03/03/2011

Do you not expect that the people with the most money are going to pay the most in taxes? Should someone making 500k per year pay the same amount as someone making 25k per year?

Tax rates, currently, are the lowest they've been in 60+ years. The notion that our nation cannot thrive while increasing some taxes on the top earners is easily debunked by our country's history, where high earners used to pay more and our economy grew at a healthy rate.

[AJ4A]

06:30 PM on 03/03/2011

Of course they will pay more more into taxes than lower earners, however their brackets are higher which in my opinion is unfair. As americans we should all have the same tax. I also think that all deductions and credits should be thrown out. The tax code is out of control and weighted in favor of the rich AND the poor, both driven by special interests. Everyone should be a taxpayer before we start taxing rich people at a higher rate.

Middle class suffers because they actually pay taxes and and do not receive any of the benefits that rich and poor people get.

If we want to lower deficit spending and our national debt we should look at our failed foreign policy and the spending attributed to it. We should look at the trillions of dollars we spend maintaining military installations and embassies that we don't use or have no value. We need to reduce our bloated government and the nanny state .

[econ1]

03:10 PM on 03/03/2011

Part of the issue is the US has high tax rates (even compared to Europe) and lots of tax breaks (handed out by politicians). As the article points out companies are often better off spending money working on tax issues than products. For example, an article in the NYT or WSJ (read both) today pointed out that Honeywell doesn't pay any corporate tax because of energy efficiency tax credits. Better would be a lower tax rate but far fewer special tax deals. It is all highly inefficient but gives Washington more clout.

[mjtaylor22]

10:47 AM on 03/05/2011

tax rates have been the same since 2000....but keep on telling yorself you pay high tax rates.....