Putting U.S. Corporate Taxes in Perspective
End Notes
[1] U.S. Department of the Treasury, “Treasury Conference on Business Taxation and Global Competitiveness: Background Paper,” July 23, 2007, Table 5-3 (giving data on a sample of 19 of the 30 OECD states). For an international comparison of corporate-level taxes (taxes paid at the corporate level, including, for example, property taxes, labor taxes and contributions, and sales taxes), see: World Bank and PricewaterhouseCoopers, “Paying Taxes 2008: the Global Picture,” http://www.doingbusiness.org/documents/Paying_Taxes_2008.pdf. This study compared the corporate-level taxation that a hypothetical company with 60 employees would face in 178 countries. The study found that the corporate-level taxes the model company would pay, measured as a percentage of its profits, would be higher in 76 other countries (including 15 OECD countries) than in the United States.
[2] “America the Uncompetitive,” August 15. The ranking is based on data from the Organisation for Economic Co-Operation and Development.
[3] Office of Tax Policy, U.S. Department of the Treasury, “Approaches to Improve the Competitiveness of the U.S. Business Tax System for the 21st Century,” December 20, 2007.
[4] Congressional Budget Office, “Corporate Income Tax Rates: International Comparisons,” November 2005, http://cbo.gov/ftpdocs/69xx/doc6902/11-28-CorporateTax.pdf. Effective tax rates were estimated by Michael P. Devereux, Rachel Griffith, and Alexander Klemm and are available on the website of the Institute for Fiscal Studies, at http://www.ifs.org.uk/publications.php?publication_id=3210. The methodology is described in Devereux, Giffith, and Klemm, “Corporate Income Tax Reforms and International Tax Competition,” Economic Policy, October 2002.
[5] U.S. Government Accountability Office, “U.S. Multinational Corporations: Effective Tax Rates are Correlated with Where Income is Reported”, http://www.gao.gov/new.items/d08950.pdf, August 2008. The paper also noted that for large corporations, “there was considerable variation in effective tax rates across taxpayers. At one extreme, 32.9 percent of the taxpayers accounting for 37.5 percent of income, had effective tax rates of 10 percent or less; at the other extreme, 25.6 percent of the taxpayers, accounting for 14.8 percent of the income, had effective tax rate[s] over 50 percent.” One possible cause for this wide variation may be that the tax treatment of corporate investment varies significantly by asset type; for a discussion of this variation in the tax treatment of investments and the potential for beneficial corporate tax reform that reduces this variation, see: Aviva Aron-Dine, “Well-Designed, Fiscally Responsible Corporate Tax Reform Could Benefit the Economy,” Center on Budget and Policy Priorities, https://www.cbpp.org/sites/default/files/atoms/files/6-4-08tax.pdf, June 4, 2008.
[6] U.S. Department of the Treasury, “Treasury Conference on Business Taxation and Global Competitiveness: Background Paper,” July 23, 2007, p 11.
[7] See United States Government Accountability Office, “Comparison of the Reported Tax Liabilities of Foreign and U.S.-Controlled Corporations, 1998-2005,” July 2008, which reported that in 2005, over 66 percent of U.S.-controlled corporations had no corporate income tax liability.
[8] All taxable income of any corporation with taxable income in excess of $18.3 million is subject to the 35 percent rate, although credits can substantially reduce the effective tax rate on taxable income.
[9] See: Aviva Aron-Dine, “Well-Designed, Fiscally Responsible Corporate Tax Reform Could Benefit the Economy,” Center on Budget and Policy Priorities,
, June 4, 2008.