Federal tax receipts on corporations flatline

Corporate profits after tax compared to Federal tax collected, 1981 to 2012

Corporate taxes are undeniably divisive at this point of the pre-presidential election season, with each side touting their plan while dissing the other’s. Regardless, I’ve previously written about the United States’ peculiar distinction as having the highest corporate tax rates in the G7 but as pretty much everyone knows, high rates simply aren’t effective. The chart above shows corporate profits (CP, red line) compared to Taxes the Federal Government has collected (FCTAX, blue line) since 1981. Curious, but even though corporate profits have surged, post credit crunch, to record highs, taxes paid by those same corporations are equal to those paid in June, 2004. Why? Lots of reasons but it seems like establishing foreign subsidiaries and subsequent use of foreign domiciles to shield taxes are two reasons that leap out at me. Regardless, having the planet’s single largest corporate tax rate really benefits one group first and foremost: those in the tax preparation industry, and the work hard to find loopholes and structures that will help businesses pay as low a rate as legally possible.

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