Friday, September 14, 2012

Tax Burdens

Corporate Taxes

 ~ Corporate groups and their political bagmen have complained for years about high US corporate tax rates. In this election cycle, however, most of the discussion has been about personal tax rates and whether there should be cuts or increases, and for whom.

Corporations have been rather quiet during all this. Not so odd, perhaps, if one takes a look at what's actually been paid in the last many decades:

US corporate profits and taxes paid

It would not appear that tax receipts from corporations have remotely kept pace with the asymptotic growth of corporate profits. No wonder corporate cash reserves are at historic highs.

When the subject of corporate taxation comes up expect to hear much angst about the high tax rate. Expect to hear much less about how the figure generally quoted is the nominal rate rather than the effective one. As the chart above shows, the effective rate is much less effective than it could or should be if we chose to get serious about our deficit and debt.

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