I almost certainly know less about corporate taxes than you do.
But how do you explain the gap between stated and effective tax rate? Maybe I'm oversimplifying by blaming the Cayman Islands but obviously big corporations are doing something to pay significantly lower taxes than the advertised rate.
Usually companies with a low effective tax rate have lost money in recent years. This is especially true over the last 3 years (I believe 3 years is the limit on a carry-forward loss credit, and 2008-2011 has been bad for business). The net effect is that US companies pay 35% taxes on their 3-year trailing average income rather than income in a given year.
Occasionally you will hear another breathless claim on places like reddit/The Huffington Post/The Daily Kos that some large percent of corporations pay no corporate taxes at all. They are usually counting the large number of small businesses organized as S-corps and LLCs which pay pass-through personal income taxes rather than corporate taxes, and counting all the C-corps that lost money and therefore paid no corporate taxes for the year. On its face it is a true statement that most corporations pay no taxes, but it is a very misleading statement.
In my experience, it is very difficult for the shareholders of a C-corp in the United States to derive benefit from the entity's business activities without the benefits being taxed at the corporate level.
Puts the effective corporate tax rate a cool 10-15 points under the statutory one, depending on sector, and has some graphs illustrating that our statutory rate is one of the highest while our effective rate is one of the lowest.
So it's not just the dirty hippies saying this.
The dirty hippies tend to get angry about stuff like the fact that Exxon apparently pays little to no corporate taxes (citation needed), and whatever else they have going on they certainly haven't posted a loss recently.
"The dirty hippies tend to get angry about stuff like the fact that Exxon apparently pays little to no corporate taxes (citation needed), and whatever else they have going on they certainly haven't posted a loss recently."
Exxon Mobile paid $21 billion in corporate taxes on operating income of $53 billion in the fiscal year ended December 31, 2010 for an effective corporate tax rate of 40%. Do leftists not know where to look this stuff up? They are allowed to take finance and accounting classes, no?
If the dirty hippies had read the paper, they'd see that machinery depreciation is a huge part of that difference between the effective and statutory rates.
The really clever hippies would notice that different industries have different machinery needs.
The especially brilliant ones would understand that the value of an oil lease goes down as the amount of extractable oil goes down, such as happens when said oil is extracted. They'd see that said decrease is just like the expenses of other industries.
"Google’s practices are very similar to those at countless other global companies operating across a wide range of industries," said Jane Penner, a spokeswoman for the Mountain View, California-based company.
woof... upon closer reading, the headline was misleading. the 2.4% rate is for overseas earnings. "Google’s overall effective tax rate [was] 22.2 percent last year".
it's not hard, however, to find evidence confirming the upstream point that large companies frequently pay a fraction of the 35% rate
Note that Google doesn't pay US taxes on profits that it makes overseas and doesn't bring into the US.
Me - I'd like Google to bring that money into the US but can understand why it isn't willing to pay taxes to do so. Many other countries tax repatriated profits differently, so their companies are more willing to bring said profits back to the mothership.
Well, can we at least agree that the tax code is all kinds of crazy and needs to be reformed, regardless of total revenue take? I thought that was noncontroversial.
But how do you explain the gap between stated and effective tax rate? Maybe I'm oversimplifying by blaming the Cayman Islands but obviously big corporations are doing something to pay significantly lower taxes than the advertised rate.