Obama plan cuts corporate tax rate

[ProSense]

Obama plan cuts corporate tax rate

By Steve Benen

<...>

The problem is with the dramatic flaws in the status quo. On paper, the corporate tax rate is 35%, but thanks to a series of loopholes and tax giveaways, plenty of corporations pay a rate much lower than that (and some end up paying nothing at all).

The resulting structure is a mess -- we have high rates, but collect less revenue because the code is filled with enough holes to resemble Swiss cheese. When Obama talks about lowering corporate tax rates from 35% to 28%, he's also talking about getting some corporations to start paying the taxes they're avoiding now.

It seems hard to believe, but the data is unambiguous: we have one of the highest corporate tax rates in the world, but the actual income tax paid by corporations "is one of the lowest in the world."

David Leonhardt had a good piece on this a year ago, noting not only the loophole-ridden status quo, but also the fact that the system isn't actually generating the revenue for the treasury it's supposed to. Among Leonhardt's findings: about a fourth of the companies included in the S&P 500 pay a total corporate tax rate of less than 20%. "Over the last five years," he reported, "Boeing paid a total tax rate of just 4.5 percent, according to Capital IQ. Southwest Airlines paid 6.3 percent. And the list goes on: Yahoo paid 7 percent; Prudential Financial, 7.6 percent; General Electric, 14.3 percent."

- more -

http://maddowblog.msnbc.msn.com/_news/2012/02/22/10479822-obama-plan-cuts-corporate-tax-rate

[Vincardog]

1. I suggest we close the loopholes, then lower the rate. We should have an

AMT for corporations

[TheWraith]

2. That's pretty much what Obama has been talking up.

If for no other reason than the fact that as it stands, we have a regressive tax rate based on the number of accountants and tax lawyers you can get to help you find loopholes, a fact which punishes small businesses.

[dems_rightnow]

3. There is a corporate AMT

See IRS Form 4626.

It just almost never applies.

[LooseWilly]

7. I agree, close the loopholes first, and offer the carrot of lowering rates for "playing ball"

The more I think about it, the corporate allowance (100% currently) on the dividends distributed from companies more than 80% owned by the parent corporation seems like a soft target. Drop that allowance to 80%, requiring corporations to pay taxes on 20% if the dividends collected from subsidiaries... and maybe corporations won't be so hot to create subsidiaries to take the risks when they are engaging in questionable activities aimed at circumnavigating regulations (PG&E in Cali transferred assets among subsidiaries prior to declaring bankruptcy in 2001 as a result of the Enron energy market frauds... Halliburton used subsidiaries based in the Caymans to conduct business with Iran and Iraq which would've been "illegal" for a US corporation to conduct... etc.).

And, whatever he does... Obama damned sure ought not to pull a Reagan and offer an "amnesty" to allow Multinationals to re-nationalize the funds they've been accumulating from foreign operations without having to pay the... drum roll please... taxes on those earnings as they are re-allotted to domestic parent holdings.

(Truth be told... I find the idea of reducing the tax rate on corporations to be EXTREMELY offensive... considering the fact that the bulk of the activities of the military-industrial complex are aimed at securing a "safe global environment" for said multi-nationals... the least the fü©√ers can do is pay a higher-than-individuals tax rate.)

[Cali_Democrat]

4. Here's what's going to happen:

The corporate tax rate will be lowered, but the loopholes will remain.

America is a Corporatocracy.

Big business is running the show.

[ProSense]

5. Well

"Here's what's going to happen: The corporate tax rate will be lowered, but the loopholes will remain."

...I doubt either will happen.

[MichiganVote]

6. Corporations pay taxes? Who knew.