Japan lowered its corporate tax rate one year ago this week, leaving the United States with the highest statutory corporate tax rate in the world. And as Washington turns its focus to corporate tax reform, groups of corporations aren’t letting lawmakers forget the anniversary.
The RATE Coalition, a group of corporations advocating for lower tax rates, sent top tax writers in the House and Senate a letter today noting the anniversary and renewing their push for lower tax rates, The Hill reports:
“Coupled with our complicated tax system, this rate makes American businesses less competitive and makes the U.S. a less attractive place for investment, ultimately harming businesses, investors, workers and consumers,” 18 executives and a pair of interest group presidents wrote to the top tax writers in both the House and the Senate.
“We know that some choices may be difficult and understand that base-broadeners, such as eliminating tax expenditures, may be necessary to achieve the significant reduction in the statutory rate that is required for the U.S. to better compete globally,” the executives added.
RATE isn’t alone. Business Roundtable, another corporate lobbying group that includes some of RATE’s members, announced plans to spend hundreds of thousands of dollars lobbying for lower corporate tax rates.
But while the companies are correct that America’s corporate tax rate is statutorily the highest in the world, what they aren’t noting is that few corporations actually pay the 35 percent rate. In fact, even as profits for American corporations hit a 60-year high in 2011, their effective tax rate hit a 40-year low, and the U.S. collects less in taxes as a percent of the total economy than every industrialized country in the world save Iceland. It’s been 45 years since corporations paid the full top tax rate, and 26 American companies avoided taxation altogether over the past four years.
Some of RATE’s members do, in fact, pay a rate equal to America’s top corporate tax rate. But corporations as a whole do not, largely because they are keeping record amounts of money in offshore tax havens in countries where they barely do business at all. To top it off, many of the corporations (though not RATE specifically, according to its letter) lobbying for reform are pushing for a “territorial” tax system that would make it even easier for them to shield profits from American taxation while leading to more investment and job creation in foreign countries.