SOTU: Use Newfound Corporate Tax Revenue to Invest in America
January 26, 2011 · By Chuck Collins
Some of this revenue should be used for long overdue investments in education, health care, and energy retrofits.
In his State of the Union speech, President Barack Obama zeroed in on the ways that corporations have gamed the tax code, saying:
"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change."
It's encouraging that Obama is zeroing in on the myriad abuses in the corporate tax code.
Unfortunately, he repeats the tired canard of anti-tax groups that complain about our "highest in the world" tax rates. It is true that statutorily, the U.S. has a high 35 percent corporate income tax rate. But the effective rate — the percentage of income actually paid in taxes — is considerably lower than in most industrial countries.
How low? According to a Bush administration Treasury Department report from 2007, U.S. corporations paid an effective rate of 13.4 percent of their profits in corporate income taxes during the years 2000-2005. Corporations in OECD countries on average paid 16.1 percent of their profits in corporate income taxes.
President Obama called on lawmakers to simplify the system, eliminate loopholes and level the playing field. He pressed them to "use the savings to lower the corporate tax rate for the first time in 25 years – without adding to our deficit." By broadening the base and eliminating loopholes, Congress could lower the tax rates without reducing deficits. But revenue shouldn't just go back to corporations in the form of a rate cut. Some of this revenue should be used for long overdue investments in education, health care, and energy retrofits. Citizens for Tax Justice, in a report released shortly before Obama's speech, called for "revenue-positive reform of the corporate income tax."
On the positive side, he called for eliminating tax breaks for the oil industry — and shifting incentives to support clean and renewable energy. He was quiet about the overseas tax havens and global tax-dodging that has gotten completely out of hand.
Cracking down on corporate tax dodgers could be a unifying theme in the new Congress.
- Six of the Top Ten U.S. Billionaires Are Kochs and Waltons
November 25, 2013
- What's Hot and What's Not at COP19 in Warsaw
November 22, 2013
- Corporate Capture in Warsaw: The 'New Normal' in the Disaster Zone
November 18, 2013
- If You Can 'Speak' with Your Money, Then Why Is Asking For Money Illegal?
November 18, 2013