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.
Why was this tax cut unnecessary and harmful? 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. The Trump administration has claimed many times that corporate tax rates are much higher than our international peers, and that those rates hurt our competitiveness. But according to calculations from the Economic Policy Institute (EPI), these claims are both factually incorrect and economically meaningless.
In fact, according to calculations from EPI, the effective tax rate that corporations paid was only 14% (if they paid any at all), and equal 2.2% of US GDP. This is significantly lower than most other developed countries. The average for other member countries of the Organization for Economic Cooperation and Development (OECD) is 2.9% of GDP raised through corporate taxes. Additionally, even if US corporations were paying higher taxes than their international peers, butting their rates will do nothing to help the vast majority of American families. Workers will not see the benefits now that the corporate rate has been lowered. Instead, this tax cut will exacerbate inequality by boosting the post-tax incomes of owners and managers of corporations.
What should we do with the corporate tax rate? From EPI experts Josh Bivens and Hunter Blair: “To help most American families, corporate tax proposals should focus on increasing, not decreasing, the taxes paid by corporations. The corporate tax system is so riddled with loopholes that it raises far too little revenue and doesn’t contribute enough to the need of the federal government to honor existing commitments to social insurance, income support, and public investment. If policymakers are going to push corporate ‘tax reform,’ they should focus on requiring corporations to pay their fair share of taxes.”
Take action above to contact your elected officials and tell them to close the loopholes allowing corporations to pay little or no taxes!
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Written by Patriotic Millionaires
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