Send a Tweet
Most Popular Choices
Share on Facebook 17 Share on Twitter Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 9/16/17

No: Corporate taxes should be reformed, not cut

By       (Page 1 of 2 pages)   3 comments
Become a Premium Member Would you like to know how many people have read this article? Or how reputable the author is? Simply sign up for a Advocate premium membership and you'll automatically see this data on every article. Plus a lot more, too.
Author 2529
Message Dean Baker
Become a Fan
  (42 fans)

From Sacramento Bee

Trump's Tax Cut Plan Alienates His Base
Trump's Tax Cut Plan Alienates His Base
(Image by YouTube, Channel: TheRealNews)
  Details   DMCA

The marginal tax rate on corporate profits in the United States is 35 percent. As President Donald Trump and other proponents of tax reform continually say, this is the highest rate in the world. This is true -- but also incredibly misleading.

Due to loopholes, the actual tax rate on corporate profits is close to 20 percent, putting the U.S. right around the middle among wealthy countries.

This numbers-versus-reality gap should be kept front-and-center in the debate over reforming the corporate income tax. If someone argues that U.S. corporations pay too much in taxes, they are not being honest.

Corporations in countries like Germany and the Netherlands pay a comparable share of their profits in taxes. High taxes are not putting our firms at a competitive disadvantage.

Furthermore, as a matter of simple arithmetic, if our corporations pay less in taxes, the rest of us will have to pay more.

Yes, Republicans promise us tax cuts will lead to a surge of investment and growth, but we've heard this one before. It didn't happen when we had big tax cuts under Ronald Reagan and it didn't happen when we had big tax cuts under George W. Bush.

In both cases, the deficit surged. If there was any positive impact on growth, it was too small to notice and certainly not enough to offset the impact of the tax cut.

The lesson from these prior experiments is that tax cuts lead to less revenue, which means larger deficits. Many of the same people now pushing for tax cuts will start screaming about large deficits when we see a fall in revenue.

This leaves two options: cutting spending or raising taxes on the rest of us. Neither of these prospects looks good for people who don't own lots of stock in corporate America.

Cutting waste is always popular, but the reality is that there is not much waste sitting there waiting to be cut. The spending that will be slashed is for areas like Social Security, Medicare and Medicaid, programs that have already shown up on the Republican hit list.

There is an alternative route that is more worker-friendly. Corporations are able to reduce their tax rate from the legislated 35 percent rate to the actual rate of 20 percent through a wide variety of tax avoidance measures. Many people also get very rich from developing tax avoidance strategies, including many in the private equity industry.

These tax avoidance strategies are a complete waste from an economic standpoint. We want people to make money by developing better products and services, not from devising creative ways to beat the IRS.

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).


Rate It | View Ratings

Dean Baker Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Dr. Dean Baker is a macroeconomist and Co-Director of the Center for Economic and Policy Research in Washington, D.C. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. (more...)
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEdNews Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

The Federal Reserve Board and the Presidential Candidates

The Deficit Hawks Target Nurses and Firefighters

The Attack of the Real Black Helicopter Gang: The IMF Is Coming for Your Social Security

The profit on the TARP and Bernie Madoff

Poverty: The New Growth Industry in America

The Real Reason For The Government Shutdown

To View Comments or Join the Conversation: