As we have talked about before….corporations are paying less and less than they ever have relative to their tax burden. You may continue to hear the Republican party and some Democrats talking about the need to have lower tax rates for corporations to ensure job growth here in America, but here’s the reality – that money flows up to investors…and as we have talked about - HERE - 57% of all capital gains goes to the 1% of wealthiest Americans. Corporations are not evil; they’re just a vessel for profits to flow to people who almost exclusively already have capital i.e. the wealthy. So – taxing corporations a little more would only put a small dent in shareholder dividends or stock value. If companies could charge more – they would have already; they charge what the market will allow regardless.
The effective tax rate paid by large US public companies fell to its lowest in a decade in the fourth quarter last year as an increasing amount of revenue was generated outside of the country. Though a handful of corporates, including General Electric, paid more tax than a year ago, many other companies are continuing the trend of paying less as a share of pre-tax income. Corporate tax reform has been a major presidential campaign issue.
Barack Obama and his Republican rivals are promising to slash the US’s 35 per cent rate, one of the highest statutory rates in the developed world, to encourage a return towards domestic investment. According to figures compiled by Morgan Stanley, the unweighted average tax rate paid by the largest 1,500 US public companies by market value in the fourth quarter was 31.9 per cent of pre-tax income. About 100 companies are yet to report for the quarter.
You can read more about corporate tax rates issues here: The Corporate Tax Code is a Big Clusterf#ck
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