...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.
Are the costs of supplying employee health plans included in the effective tax rate? If not, they should be.
Posted by: Boff | 01/31/2011 at 05:58 AM
The Republican message has been that Obama-enabled regulatory overkill is stifling jobs growth. Is this merely a tactic that they think they can get away with? Or is there another agenda that Republicans are paid to promulgate?
Posted by: Boff | 01/31/2011 at 06:01 AM
Oops wrong post.
Posted by: Boff | 01/31/2011 at 06:03 AM
And in Canada - is it any wonder we have a former Conservative minister heading the Chamber of Trade and a former Liberal Finance minister heading the Confederation of Canadian Chief Executives...and both leading political parties bow and scrape to them!
I think - by their definitions - I'm a socialist!
Posted by: Wascally Wabbit | 01/31/2011 at 08:46 AM
Didn't Obama specifically say he wanted to lower and broaden corporate taxes, as in reduce the number of exemptions?
Posted by: Darwin O'Connor | 01/31/2011 at 10:09 AM
What is Torstar's effective tax rate averaged over 2005-2009? That's bringing it home.
Posted by: CQ | 01/31/2011 at 10:15 AM
6. Good god of heaven! I can’t imagine what would happen to my assets if I wouldn’t find you guys. You helped me learn the real facts about the law to get a second passport. And gave me right advices which helped me saving my precious assets. I thank to you people. Second Passport
Posted by: Second Passport | 02/02/2011 at 03:50 AM