Yesterday, the Congressional Budget Office (CBO) announced that the federal government will “run a near-record deficit of $407 billion for the budget year ending Sept. 30.”
Today, CBO Director Peter Orszag made an appearance on C-Span’s Washington Journal to explain some of his office’s numbers. He said that “a big part of why the deficit deteriorated” is that “corporate income tax revenue fell from 2.7% of the economy to 2.2% of the economy.” Watch it:
As the Wonk Room has already noted, U.S. tax revenue as a share of the economy is already below the Organization for Economic Cooperation and Development (OECD) average. Between 1998 and 2005, “about two-thirds of corporations operating in the United States did not pay taxes.”
In light of all this, Sen. John McCain’s (R-AZ) proposal to cut the corporate tax rate from 35% to 25% is simply not helpful. A cut means even less revenue, which won’t fix an already exploding deficit, and it doesn’t even create jobs like McCain claims it will.
Cutting the corporate rate only sends tax breaks – to the tune of $175 billion – to America’s corporations, which are already contributing less than they were just one year ago.