Should the corporate tax rate be lowered?
President Barack Obama recently proposed lowering the corporate tax rate to 28%. Rick Santorum, in an attempt to outdo him, proposed lowering the corporate tax rate to 17.5% so that American corporations can compete more effectively. But is there any justification for doing such now?
Presently the average corporate tax rate is only 12.1%. So why is there all this screaming and hollering about 35%? Who is paying a 35% tax rate? Certainly not some of the top thirty corporations in America, who in reality had a negative tax rate.
And corporate profits in the third quarter of 2011 alone were at an all-time high at $1.97 trillion. Do we really need to increase our national debt now with a $15 trillion national debt by giving the corporations a giantic tax cut?
GE had a negative tax rate of 64% in 2010. And between 2002 and 2011 it had an average tax rate of only 2.3%.
Over the last sixty years, corporate tax revenues as a source of federal tax revenues decreased from 30% to nearly 5%, whereas the payroll tax revenues as a source of federal tax revenues increased from around 10% to over 40% of the total revenues. In other words, employers had effectively shifted their tax burdens onto their employees, as they had their medical insurance and retirement benefits. Cool, huh? The transfer of wealth to the top 1% keeps going and going and going.
Warren Buffett makes a compelling argument for justice and equity in our tax laws, especially in light of the huge national debt and the gigantic transfer of wealth to the few over the last thirty years.
Why are Certified Public Accountants so silent on this issue? Are they not concerned about equity in our tax laws?
To see a video and transcript of more on tax injustice in America today, please see Should corporate taxes be lowered when their effective tax rate is only 12.1%?
The Barefoot Accountant—is a Certified Public Accountant, Certified QuickBooks ProAdvisor, operating an accounting, tax, and QuickBooks consulting firm in Berlin, Connecticut, Accountants CPA Hartford, Connecticut, LLC. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. Bill is a crazed animal lover, feeding birds, squirrels, chipmunks, skunks, possums, stray cats, and any two-legged or four-legged critter traversing through his yard. His backyard in Berlin, Connecticut has been certified as a habitat suitable for wildlife by the National Wildlife Federation.
Bill also writes an Accounting, QuickBooks, and Tax blog: Accounting, QuickBooks, and Taxes by the Barefoot Accountant. For entertaining articles, please see his listing at The Amazing Brighenti.