On the stump, Gov. Sarah Palin (R-AK) has been emphasizing Sen. John McCain’s (R-AZ) plan to cut the corporate tax rate from 35 percent to 25 percent, citing the oft-repeated claim that the U.S. rate is the “second highest in the world.”
However, yesterday on CNBC, Sen. Claire McCaskill (D-MO) was asked if the “second highest” rate needs to be cut, and responded with the true story: the U.S. tax code is riddled with loopholes that enable corporations to pay far less. Watch it:
McCaskill is quite right to say that corporations benefit from the intricacies of the tax code, as it contains myriad “loopholes, shelters, and giveaways that minimize, or completely eliminate corporate taxes.” This week, in fact, the Center on Budget and Policy Priorities released a report showing that “the U.S. corporate tax burden is smaller than average for developed countries” due in part to the “plethora of generous corporate tax breaks“:
Corporations in 19 of the member states of the Organization for Economic Co-operation and Development paid 16.1 percent of their profits in taxes between 2000 and 2005, on average, while corporations in the United States paid 13.4 percent.
The CBPP noted that the “second highest” charge “while true…gives the false impression that the corporate tax burden is greater here than in other developed countries.”
This all makes perfect sense, since the U.S. also collects below the OECD average in corporate tax revenue. The Treasury Department actually estimates that “various corporate tax breaks will cost the federal government more than $1.2 trillion over the next ten years.”
Instead of worrying about the amount of taxes that corporations are paying, perhaps Palin should focus on the 100 million middle class households to which the McCain/Palin economic plan gives no benefit.