As I lament just how few deductions I can take to move that digital Turbo Tax counter up toward a fat green refund, I have to consider what it'd be like if, instead of corporations being people, people like me were corporations. Because then, as my colleague at Demos David Callahan writes today, I'd be sitting pretty in "Loophole Land" instead of toiling over here in "W-2 Ville".
David's article, part of the Demos' "Taxes Matter" week, includes an infographic that lays out the facts about who really pays for our government to function -- and debunks the conservative talking point that America's high corporate tax rate hurts our international competitiveness.
David points out:
Thanks to the laws of Loophole Land, the effective corporate tax rate is actually lower than in the U.S. than many other countries. A recent study by the World Bank showed that the U.S. effective tax rate was below that of many of our top competitors, including Germany, Canada, India, China, Brazil, and Japan. As well, corporate taxes make up a lower percent of GDP in the U.S. than in many other industrialized countries.
And what about President Obama's vision of closing loopholes but lowering the statutory rate, so that the entire exercise doesn't deliver any greater contribution from U.S. corporations to our country?
Back in the 1950s, corporate income taxes made up 23 percent of federal revenues. Now that figure is under 8 percent. Put another way, corporate taxes were between 5 to 6 percent of GDP when Eisenhower was in office, but have since fallen to 2 percent today. Yes, it is time to say goodbye to Loophole Land. But reformers should also seek to reverse years of decline in corporate tax revenues as a way to meet the country's fiscal challenges.
(Heather McGhee is Washington director at Demos, a nonpartisan think tank and the Prospect's publishing partner.)