As the budget battles in Washington continue, corporations have stepped into the fray with some of the most aggressive lobbying we’ve seen in years – calling for cuts to corporate tax rates, a widening of offshore tax loopholes that already cost the U.S. Treasury $90 billion a year, and cuts to government services and benefits, including Social Security and Medicare.
In making their case, corporate executives decry the U.S.’s 35% corporate tax rate claiming it is the highest in the world and makes their businesses uncompetitive globally. The evidence suggests otherwise.
Corporate profits are at a 60-year high, while corporate taxes are near a 60-year low [See Figure]. U.S. stock markets are at record levels, and American CEOs are paid far more than executives who run firms of similar size in other nations. Many U.S. corporations pay a higher tax rate to foreign governments than they do here at home.
America’s 35% tax rate is the highest among industrialized nations, but very few companies pay anything like those rates. Total corporate federal taxes paid fell to 12.1% of U.S. profits in 2011, according to the Congressional Budget Office. The average profitable company in the Fortune 500 paid just 18.5% of its profits in federal income taxes between 2008 and 2010, according to Citizens for Tax Justice, a nonpartisan tax research organization. Dozens of large and profitable companies paid nothing in recent years.