...and the overtaxed U.S. corporation myth.
Well, that didn't take long. Obama last Tuesday hinted at pushing for a reduction in America's 35% top corporate tax rate, calling it "ridiculous" in comparison with more competitive, lower rates elsewhere.
Yes, but as we all know, few corporations pay the 35% tax rate, or they wouldn't have all those phalanxes of corporate tax lawyers on the payroll.
Bloomberg Business Week was fast to report that "U.S. multinationals paid 26% on average, slightly more than the global average of 25%." That's based on a University of North Carolina study of U.S. multinationals' effective tax rates between 2003 and 2007. Effective meaning taxes after credits, subsidies, deductions, shifting profits to tax havens and other loopholes.
To bring it home, here's the effective tax rate for some giant U.S. firms averaged over 2005-2009:
General Electric Co., 11.5%; Pfizer Inc., 18.7%; Cisco Systems, 21.6%; Johnson & Johnson Inc., 22.8%; Bank of America Corp., 24.7%; Caterpillar Inc., 24.7%; Microsoft Corp., 26.7%; United Technologies, 27.5%; Apple Inc., 28.5 %; and Wells Fargo & Co., 30.9%.
Count on Jeff Immelt, CEO of GE and now moonlighting as a top Obama economic advisor, to strongarm Obama's economic team into still lower corporate tax rates. Lower, presumably, than the meagre 11.5% rate applied to GE through much of the past decade, during Immelt's watch.
Oh, you were wondering about the supposed lower, more advantageous, tax regimes for America's offshore corporate rivals? Well, BP PLC paid at a 33.8% rate, French grocery superstore operator at a 32% rate, and GE's European archival Siemens AG's effective tax rate was 31%.
Wish I was taxed at 11.5%.
This handy NYT chart tells the story of why reforming a tax code so heavily favoring Corporate America will be near impossible. Note that the official corporate tax rate of 35% doesn't apply to any of these firms.