Corporate profits are currently at an all-time high (while worker wages as a percentage of the economy have plummeted to record lows). But despite those sky-high profits, corporate income tax revenue is projected to be just 1.5 percent of GDP this year, below the recent average and far below the amount raised by the tax just a few decades ago.
As the Century Foundation noted in this chart, the corporate income tax, as a share of total government revenue, used to track reasonably well with corporate profits. But in the last decade, the two have become decoupled:
As the Century Foundation’s Benjamin Landy explained, “In 1952, the corporate income tax accounted for about one third of of all federal tax revenue. But, over the years, U.S. multinationals have devised increasingly complex tax avoidance schemes, far beyond the ability of the IRS to credibly monitor or enforce. Although the corporate tax rate was also lowered significantly in 1986, tax avoidance is one of primary reasons why corporate taxes supply less than 9 percent of federal revenues today.”
Between 2008 and 2011, dozens of multinational corporations paid no corporate income tax at all, despite making billions in profits. In 2011, the effective tax rate paid by American corporations fell to 12.1 percent, a forty-year low.