According to the latest estimates from the Congressional Budget Office, U.S. corporations paid just a 12.1 percent tax rate in fiscal 2011 on their U.S. profits, a 40 year low. This fact flies in the face of Republican rhetoric, as the GOP consistently claims that the U.S.’s high corporate tax rate is hurting the economy.
Today, House Republican Whip Kevin McCarthy (R-CA) was asked about the new CBO numbers during an interview on CNBC. Far from admitting that, in fact, the U.S. is a very low-tax country for corporations, McCarthy tried to insist that U.S. corporate taxes are high, incoherently babbling, “If you look at every rate where you go through, America is the second highest where they go”:
Q: Congressman, do you think that perhaps Obama’s lower taxes are working here? The Journal reports this morning that the effective tax rate which American corporations are now being taxed is at a 40 year low, 12.1 percent. Partly, of course, because we’re forgoing $55 billion a year so they could immediately write down their investments. Are those tax cuts working and, in your view, is it right, are they good value for money to add to the deficit?
MCCARTHY: Look, I see our tax system as holding us back. We have the second highest corporate tax rate in the world. [...]
Q: But Congressman, aren’t the new figures from the CBO indicating that America does not have a very high tax rate? The effective tax rate in fiscal year to the end of September was 12.1 percent according to the CBO. That is a very low rate of corporate taxation.
MCCARTHY: If you look at every rate where you go through, America is the second highest where they go. If you look at how the jobs are departed, you find that statistically we are too high…Statistically, I don’t see where the argument stands.
When looking at the rate that corporations actually pay (as opposed to the statutory rate on paper), the U.S. has the second-lowest corporate tax rate in the developed world, not the second-highest. The U.S. raises far less than other nations in corporate tax revenue and U.S. corporations pay a far lower effective rate than their foreign competitors:
Of course, McCarthy can’t even be bothered to understand the economic policies prescribed in his own book, so it’s not very surprising that he has a difficult time grappling with hard facts from the CBO too.