by Patriotic Millionaires | Updated on 5.17.18
What is the corporate tax rate? The corporate tax rate is the rate at which businesses are taxed on their income. After the passage of the GOP tax bill in December, the current corporate tax rate is 21%, the lowest rate since 1938.
Before the GOP bill, the corporate tax rate was 35%, although due to loopholes and deductions, very few businesses paid even close to that rate. In fact, according to calculations from EPI, the effective tax rate that corporations paid was only 14% (if they paid any at all). We do not yet have data on the effective tax rate corporations will pay now that the statutory rate is only 21%, but it will almost certainly be lower than 14%.
Why did the GOP bill cut the corporate tax rate? The Trump administration claimed many times that American corporate tax rates were much higher than our international peers (despite the effective rate paid actually being lower than many other developed countries), and that this hurt our economic competitiveness. They claimed that a cut to the corporate rate would lead to corporations boosting the economy and creating new jobs.
So does cutting the corporate tax rate spur job growth? To investigate their claims, a report by the Institute for Policy Studies was the first to analyze the job creation records of the 92 publicly held US corporations that reported a US profit every year from 2008 through 2015 and paid less than 20 percent of those earnings in federal income tax. Did these reduced tax rates actually lead to greater employment within the 92 firms? The data IPS have compiled gives a definite - and sobering - answer.
Tax breaks did not spur job creation.
If it does not spur job growth, who benefits from corporate tax cuts? So if reducing the corporate tax rate does not lead to job growth, what does it lead to? The resounding answer: pay increases for CEOs.
Written by Patriotic Millionaires
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I am your constituent. I am writing to ask that you vote no on the new corporate tax cuts. This is an obvious give away to the most wealthy of this country and create a huge burden on the middle income citizens of the US. The people who will suffer most are the elderly and the disabled. The people who will benefit most are the wealthy and the politicians who cater to them in order to keep their jobs. This bill is outrageous and should never pass.