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How Much Do U.S. Corporations Really Pay in Taxes?
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0%. Everything they get charged, they pass on to the consumer.
+Chad Wilson , did you ever stop to think that if companies were paying less taxes they'd have more money to hire some of the people that are out of jobs in this economy? And that in doing so those people would be paying taxes, thereby adding to the general tax pool so that the net effect would be that the government had the same amount of tax revenue...and the economy would be better in general because more people would have disposable income?
Looking at earnings of corporations they all report their effective tax rates. Some of them pay way less than you'd think...
One thing not to forget is that it's cheaper to have ex-bureaucrats on welfare than to have bureaucrats on salary and benefits.
So whats the effective tax rate that Dell actually pays.
G.E. certainly managed to do well -- effective tax rate ZERO.
Dell paid 17% tax rate last quarter... Look at their earnings, they all have to show pre-tax and post-tax earnings.

Most major corporations pay lower tax rates than smaller corporations. I say this knowing that most small to medium businesses make up the bulk of the business taxes and that's why the average rate is around 27% when in reality the largest companies almost all pay under 20%...
Good video, but I'm not sure you're going to get too many likes on it... I think once a corporation begins accumulating an exorbitant amount of wealth (that number, of course, is much dependent on p.o.v.) they should pay a larger percentage. Otherwise, the monetary system is similar to a dictatorship. And those don't usually end too well.
+Stuart Seemungal , I support a 0% tax rate for corporations. I believe such a move would cause many of the international companies that HQ in small island nations to avoid taxes to HQ here in the USA to avoid paying taxes in their home countries. As such, it would employ more people here. The government would do fine to tax individual incomes only, plus a small interstate sales tax.
The main reason the bigger companies pay lower effective tax rates is that they have more loose change to spend on activities the people reward with tax breaks. If you want to level the playing field, stop using the tax system as a tool for political and social engineering.
NASA, espionage and defense budget ain't cheap.
If you scroll up you'll see I agree with you. Big corporations get the lowest effective tax, but the average comes out to 27% because the majority of companies are small and medium businesses and end up paying a much higher tax rate.
I find videos like this somewhat disturbing, because they hide rather than illuminate the truth. Among other facts that are glossed over is that multinational corporations end up paying a blended rate based on the rates of all the countries they do business with. So, for example, a quick look at Dell's last quarter financials indicates that Dell paid a blended rate of 16.7% - hardly the 35% that is suggested to a financially naive viewer of a video like this.

In fact, by quickly checking the financials of some well known companies in our industry, you quickly see that only Amazon seems to be paying outsized taxes. Perhaps that is due to the US-centricity of their business, but maybe they just don't have as many tax lawyers.

(I just worked up a quick spreadsheet by looking up pre- and post-tax financials from Google Finance for the last quarter, with the exception of Nokia, where I had to go back several quarters to find a quarter with actual profit to be taxed. All revenue and tax numbers are in millions.)

Company Pre-tax Post-tax Tax Tax Rate
Dell 1072 893 179 16.70%
Google 3498 2705 793 22.67%
Apple 17477 13064 4413 25.25%
Microsoft 8239 6624 1615 19.60%
Amazon 273 187 86 31.50%
IBM 7274 5490 1784 24.53%
HP 2399 1926 473 19.72%
Ebay 2435 1879 555 22.81%

Compare European companies SAP and Nokia:

SAP 1619 1199 420 25.94%
Nokia 403 231 172 42.68%
It may be that US corporate tax rates are too high. But this video doesn't make an effective case for that assertion.

I agree with +Steve Faktor that personal income tax policy is more of a problem than corporate taxes, and I'd be glad to trade lower corporate taxes for fewer deductions and higher effective tax rates for high income individuals.

Michael - I'd love to have a real debate about tax policy. I'm sure there's a lot that I'm missing, and would love to chat some time about what in Dell's experience makes you think that our tax rates are damaging to your business. At O'Reilly, I've never found myself at a competitive disadvantage due to our taxes relative to those of international competitors.

FWIW, O'Reilly's effective tax rate for 2011 was 31.94%. Would I like it to be lower? Absolutely. Do I think we can solve our country's problems by cutting taxes? Absolutely not. We're in a crunch where we want services as a country, but we don't want to pay for them. Unless we're really willing to end entitlements like Medicare and slash our military spending, high taxes are the price we pay.

What I have a real problem with is the notion that we can get something for nothing. Let's not talk about cutting taxes unless we are also willing to do the math on how to balance the budget without having to raise them!
+Stuart Seemungal Have you ever run a company? I don't know any company that has hired fewer employees because they had to pay taxes. Remember that you pay taxes on profits. If you think you can make a better return by investing money in expanding your business, rather than in accumulating profits, you do it. Profit is what is left over after you make those investments.

Amazon has demonstrated again and again that they are willing to forgo present profits for future growth.
Plenty of Corporations paid no income taxes, in fact got rebates [ = reverse tax subsidies = corporate welfare] on billions in income according to reports. Then they say its double taxation, a blatant, fictional, fabricated falsehood, while workers get quintupally taxed [=. State Income tax, federal income tax, state sales tax, property tax, on house, excise tax on car ]. Work creates wealth and is taxed the most. capital gains is untaxed or minimally taxed and creates nothing of value. In proportion to the wealth that moneyed corporations have they are not paying fair share and are stealing in many cases from the public till. then theres the bailout bonuses. GE, EXXON, VERIZON , BOA and on and on paid no taxes. John Paulson earned $5 Billion & paid ZERO taxes. As ratigan says: its corporate communism, Vampires, Lizard Brains, Parasites, Tapeworms. We should guillotine them all!
+Tim O'Reilly says, "Remember that you pay taxes on profits."

And on employee compensation. A company has to pay taxes on their cumulative tax burden. How can that not affect their profits and therefore their growth?
+Mark Stouffer I was just going to say this, "Well, there you go. That's pretty much it." And then your comment popped up. But, I still feel it's accurate. Just inserted above.
+Randall Parr says, "We should guillotine them all!" All corporations?

What about this: instead of all the tax-payers looking over each other's shoulders doing the work of the IRS why not turn our gaze to the people who are granting all these loopholes??? Only the bad corporations are getting all these bailouts but you want to guillotine them all?

How about... instead of limiting wealth, we limit government???
All you need is a clever accountant, just ask GE :)
For GE, I think it is the combination of a clever accountant and a crony-capitalist-oriented friend in the White House.

"In contrast, the effective corporate tax rate (ETR) measures the taxes a corporation pays as a percentage of its economic profit."

The organization making this video is advocating for a territorial tax system, which certainly helps large multinationals more than small and medium size businesses. Most industrialized countries that have lower ETRs also have VAT systems, so there is a trade-off in how taxes are collected.

Saying corporate taxes should be lower is saying that other taxes should be higher. Say all taxes should be lower says the deficit should be higher. If the agenda is smaller government, the correct policy debate is about where to trim the budget.
Drop MY INCOME TAX rate to that of the effective corporate tax rate and I will be able to SPEND more money with these companies, thus allowing THEM to PAY the taxes they have been allocated
Grassroots. For money. Sounds familiar. And successful.
I live in Nevada, and do not pay a state income tax, but my federal income tax rate runs higher than that of corporations
I paid a higher percentage in taxes than Mitt Romney, Michael Dell or any of the Waltons, of Wal-Mart
I love the ordering here: "Saying corporate taxes should be lower is saying that other taxes should be higher. Say all taxes should be lower says the deficit should be higher. If the agenda is smaller government, the correct policy debate is about where to trim the budget."

The preference seems to be for keeping total taxation constant, and if that can't be pulled off, then crank up the deficit. Last resort: cut government spending.

In fact, lowering taxes can be a forcing function for cutting government spending.
Lower taxes are great politics, but they are not a forcing factor on budget cuts. Tax cuts have been one of the primary drivers of higher deficits over the past decade. Since 2000, taxes went down while unfunded entitlements and wars increased the budget. The thing that will reduce the budget is reducing the budget, and debating what gets cut would be more useful than cutting taxes and wishing away budgets. Lets have that discussion.
Good points +Steven Damron . Another thing that could be discussed is all the restrictions on business that we apply but are never able to remove. Most of it is not actually helping. That is one place we could reduce the budget: regulatory agencies.
EXCEPT: You can't change one without the other. For every expert, there is an equal and opposite expert. You can't eliminate regulations that make sense. You can't even consider the fallacy that all deductions are loopholes. Make it make sense for both the general economy AND the company's bottom line.
The real issue is not the nominal or the effective tax rate, it is the loopholes in the system and the widespread greed that allow and push wealthy individuals and major corporation to legally bribe lawmakers to make those loopholes even bigger so that they can avoid paying taxes in the US by expatriating profits and huge incomes to low tax jurisdictions, leaving a shrinking middle class and small businesses with almost all the tax burden. And this has been happening more and more not only in the US but in Europe as well during the past 20 years.
From an outside perspective; it seems to me that the US government needs such high tax rates to pay for the US military expense.
something smells in here, it's the bull that video is full of.
This is amazingly misleading. One article the video sites from the New York Times, correctly states that US Businesses has high tax rate but pays less. The video conveniently glosses over the fact in the same articel that in a "GAO Report released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied." I's love the opportunity to take a year off from taxes.

Further more what about GE having an effective tax rate of -61.3% (yes, that's a minus) for 2008 - 2010? What about American Electric Power, Dupont, Verizon, Boeing, Wells Fargo, FedEx and Honeywell — had tax rates between -0.7 percent and -9.2 percent in the same time period? Quite amazing.

Finally, look at who funds the Tax Foundation and you will see it's none other than Koch Foundation and the Earhart Foundation. If you believe anything that comes from them, you've been had because you are not in the club.
Its always the same story, complains about taxes. Nobody asks me and at the end of the year i have to pay taxes on my salary and no way to hide or reduce and its good because my country need to be run and my country is creating jobs in the Government and i mean jobs and not slaves.
Companies today create jobs in cheap countries like US does in Mexico for example and the excess money goes to shareholders. Money that does not create jobs but very rich people.
And those companies and rich pay the lowest tax rates and that is where the fish stinks.
Look at the state of your country, all the poor, all the states running out if money because some think taxes have to be cut and cut and cut ...
So dont ask what the country can do for you but what you can do for your country ! Remember ???
+Ingo Knöll says, "my country is creating jobs in the Government and i mean jobs and not slaves." Jobs are created by markets, not governments.
Government jobs only take more out of the real economy, which the government can only pretend to be. If you must beg your government to create more jobs then you have already become a slave. That is why you must ask how you can give more of your life to your country. Does your government justify your existence, or the other way around?
Well, we have to start with voting out the capitalist killer in office.
Thanks for the post!
Oh enlighten us with your feel, felt, found story on how handling the government our wallets is best for the country Enrico.... Facts are facts.. The bottom 50% pay less that 10% of the tax burden. Our corporations like American Airlines and GM are dominated by labor unions and government red tape. Michael is just pointing out another fact. You would not be writing if you did not love aspects of this country. By the looks of your name, your probably a European, and you can not help the way you have been taught to think. Hold on for a little while, and the US will be a big version of Greece. Thanks for playing.
Tobias, if you go to the IRS stats page for 2010, you will find that the percentage of all taxes paid, that were paid by corporations was less than 10%.
Oh, by the way, the facts are this: over the past 3-4 decades worker productivity, and product quality has steadily risen, and corporate profits (that's after business costs) have steadily risen as well. At the same time, worker wages and benefits, corrected for inflation and cost of living, have actually declined. The average worker today actually makes less "effective" dollars today than my father did in the 1960s. So, the arguement that labor unions and government red tape are killing our economy or hurting our businesses is factual bunk! Corporate greed is a real phenomenon, and corporations need to start acting responsibly and humanely. There may be trickle down, but as can be seen, there is also trickle up, and the down is getting less and less, as the up is getting more and more.
Funny how some people here commenting don't seem to understand the implications of an uncompetitive tax structure in the US.

It's not only the taxes, it's the regulations along with the cost of labor that contribute to this uncompetitive environment. None of us wants low wages, so that's not the place to get more competitive - which leaves burdensome regulations and taxes.

If these factors didn't come into play, why do various jurisdictions "woo" foreign investment in their communities with tax breaks and regulatory leniency?

We shouldn't be trying to squeeze income taxes out of corporations anyway, as ultimately - they don't pay them. Their shareholders, employees, customers and clients pay them... well, up until the time they buy foreign.

Most people don't even consider the employer-paid side of payroll taxes; ad valorem taxes; property taxes, etc. that must be paid in addition to income taxes... and ALL of those taxes are nicely hidden in the price of everything we buy... or EXPORT.

Wake up, folks.
I've heard all that before, and it just does not hold logical water. If quality, productivity, and profits (which come after the cost of dealing with regulations) are going up, along with egregious ceo salaries and bonuses, and effective wages and benefits are going down, then there is only one explanation for the constant whimpering of big business about taxes and regulations: it is simply a smokescreen for greed, or it is a symptom of how a capitalistic system cannot sustain itself, because it constantly needs to feed itself from the bottom up. That is not so much a failure of capitalism purse, but one that relies on a "public" investment structure that, understandably, clamors for bigger and bigger returns. Geez Doug, have we already forgotten that it was poor regulation of the financial markets that got us into this crisis in the first place, not taxes, or deficits. The world has to stop looking at economies as analogic, linear, cause-and-effect processes, and see that they are interdependent systems. The bottom line is that workers and employers are inextricably dependent on one another. A friend of mine recently posted on fb, "The system isn't broken, its fixed.". Well, I thought that was witty and humorous, but what I believe is that nonsustainability is built into the system. No one wants that, or is conspiring to create that, its just that we are getting to the end-state of the process, where the nonsustainability is becoming noticeable. We have to get to a place mentally where we can entertain the idea and admit that the god Capitalism is not perfect and without flaws, as communism has had to do in recent decades, so we can get about the job of creating an economic system that really does work for everyone. And I am 100% sure that (heaven forbid) it will have to be a system with compassion and humane responsibility at its core. Without that, in the end no one will win. We will all be just scurrying around with paranoid eyes, trying to survive. Thanks for taking the time to reply. I hope we can all work this out.
"If quality, productivity, and profits are going up...". They are going up because of the culprit you blame, GREED. They are going up because some people out there are still not living off of government subsidies or TARP funds. Some people still make their living by making quality, productivity, and profits go up. You call that greed, but it is our only saving grace right now. The solution you propose is called ENVY. If you think capitalism will fail because it is a "cause-and-effect processes" you are mistaken. You confuse the issues when you say "workers and employers are inextricably dependent" in an "interdependant system". Regulations do not cause quality, productivity and profits to go up. They couldn't even stop Bernie Madoff. He was regulated by seven different agencies and appeared before the SEC twice, who found no violations. But they were too busy browsing porn for eight hours a day.

Capitalism is free people making their own choices. The alternative is command economies, with a third party interfering in every transaction to benefit some supposed fourth party. That is the envy component, a claiming of ownership of something that you did not produce. That is why socialists want to do away with property. They are trying to justify their claim on the un-earned, and they will discard logic and reason and "cause and effect" to attain it. That is why they are still waiting for Marx's prediction of capitalism's failure to come true 150 years after he made it, and after scores of nations who followed Marx failed. It is not reason that makes them cling to the dream of capitalism's demise, and the second coming of Karl Marx. It is envy. That is what you are endorsing when you confuse the issues and say "a capitalistic system cannot sustain itself". But capitalism has a way of burying it's undertakers.

If you want to find a way to "work this out" you may try finding out what capitalism is (from someone maybe a little newer than Marx or one of his disciples). I suggest Mises "Human Action" for starters.

The best way to "work this out" would be to separate markets from state in the same way we have separated church from state (which benefited both church and state). If we remove government controls of industry those Bilderburgs and Rothchilds and others would have to compete on the last place they want to compete, a free and unregulated market governed by trust and reputation instead of coercion and force from the influence of their friends in power. And you may want to decide soon.
I couldn't have said it better. Thanks, Mark.
Mark and Doug: It seems to me that you are missing my point. I will try again.
Verifiable facts: 1) Quality of products has never been better. 2) Productivity has never been higher. 3) Profits have never been higher. 4) CEO and managerial salaries and bonuses have never been higher. 5) Salaries for workers, in terms of actual value, have fallen over the last 30 - 40 years. 6) More and more dollars are owned by fewer and fewer people. Since quality and productivity are the result of worker performance, we can conclude the following: A) Workers are not the lazy, irresponsible people that corporate entities like to paint them as. B) Corporations CEOs and top management are doing quite well, thank you, while the rest of the population suffers. Therefore, a) Labor Unions and worker demands are not responsible for our economic decline, and do not place an excessive burden on corporations, corporations are doing very well thank you. b) Labor Unions and worker demands are not responsible for the movement of jobs outside of the USA, corporations are paying less in salaries now to American workers than they did in the 1960s!, and they are doing very well thank you. c) The constant carping and wimpering of big business about taxes and regulations is BS, as they have never profited more than now.

I am not a Marxist by any means, so those two paragraphs were totally lost on me. Communism as practiced by the Soviet Union, China, and other failed states was not true Marxism anyway, it was Totalitarianism.

I did not say that Capitalism is a cause and effect process, I said that ECONOMIES are the opposite of that, interdependent systems of relationships, which include the relationship between employers and employees. To prove that employers and employees are interdependent, all we have to do is imagine what would happen if a general strike was called across the nation, or if, for some insane reason, all employers suddenly fired all their employees.

As for Capitalism being non sustainable, this is a personal opinion, based on my thinking through of the logical outcome of a radical freemarket economy. I may be wrong. In order to satisfy investors, corporations have to produce greater and greater profits. Eventually, the only way to do that is to pay lower and lower wages, and to charge higher and higher prices. This is already happening. Eventually the lower and middle classes will be squeezed out of the market, and quite frankly, they will have to revolt.

I would like to see a logical arguement, using facts and not rhetoric, or emotional cliches, in answer to the above.
John Paulson Earned $5 B in 2010 and paid NOTHING ZERO income taxes! Same is true for the largest corporations in the USA. Workers get socked with quatruple taxation. Only work creates wealth but the creators of wealth get the high taxes and the benefactors of the wealth pay far less as % of their gains. Its legalized robbery of the working class to benefit the 1%.
I have read most of this blog, and everyone finds their perverted version of some truth to justify their stance. One exception is not going to sell anyone. broad sweeping statements and envy of someone who makes more than you will not get any logical thinker to consider an arguement... In my opinion, its easy. Simplify the tax code and tax less regardless of entity, so the market can do wonders for hard workers like yourself. Be the next Mark Zuckerberg, instead of complaining how you pay more in tax than a man that has worked more hours than you have in your life, and he is only 27. ENVY ENVY ENVY! JEALOUSY!, CLASS WAREFARE, ENVY....... Thanks Obama.
The claim that others are jealous is a psychological ploy that elementary school children often use to avoid taking responsibility for their own mistakes and bad behavior, and to cover-up their own sense of insecurity. I bring a six figure net income, and I have everything I need and want. I don't need or want a $80 million bonus, especially if I have to become a conscienceless psychopath to get it. I consider Mark Zuckerberg an A-hole, regardless of his monetary success. Envy Mark Zuckerberg, are you serious? The only people who envy him are budding sociopaths, sitting in business and advertising classes at college, wondering when daddy is going to spring for their next BMW. Success to me is more than how much money you can make. Success to me is what kind of a person you make of yourself. ENVY, ENVY, ENVY, blah, blah , blah, is an extremely poor excuse to use to avoid having to produce facts and logical arguements to support your claims. I didn't think I would ever have to tell anyone that the phrase, "Greed is good." was meant to be satirical.
+Bob Grant said, "I am not a Marxist by any means" It's funny how you say that and then go on to defend Marx and espouse his ideas. I am sure it is just a coincidence that it's "personal opinion, based on my thinking through of the logical outcome of a radical freemarket economy."

If you think Capitalism is such a failed concept you should try explaining it to China. They followed the way of Marx and socialism for most of the 20th century and it led to death by starvation for 50+ million people among other calamities. In the late 80's they decided to let people own property and removed many of the Marx/socialist inspired government controls on peoples lives. In a period of 15 years they lifted six hundred million Chinese people out of abject poverty.

And Bob, how is pointing out the ENVY component a psychological ploy, but when you ascribe it to GREED it is not a psychological ploy?

Greed is what we accuse people of when they want the rights to their own property. When someone has worked hard for something and they want to keep it they are accused of greed. It is the easiest thing in the world to accuse someone of because we all know for a fact that you must have some component of greed in order to keep yourself alive. So you are stooping to the grade school level when you accuse people of greed.

Envy is what people are doing when they claim the right to OTHER PEOPLE"S property! It is valid to point out the improperty of envy. This is NOT a psychological ploy. You don't like it being pointed out because you realize you have no way to justify your envy. I can understand that myself. But don't fool yourself into thinking that greed is a valid accusation and for some unnamed reason envy is not.
"corporations have to produce greater and greater profits. Eventually, the only way to do that is to pay lower and lower wages, and to charge higher and higher prices. This is already happening. Eventually the lower and middle classes will be squeezed out of the market, and quite frankly, they will have to revolt."

Yeah that's not from Marx at all[?]
"6) More and more dollars are owned by fewer and fewer people."

This is the concentration of wealth myth. It can happen, but only by government enforcement. We complain about the so-called robber barons but want to return to the system of real barons. And wait till you see some of the castles they built.

The concentration of wealth is not caused by trade. Look at China. They are buying golden toilets and million dollar Rolls Royce. They are becoming our customers. So that concentration of wealth Marx warned you about... it's spreading.

Just to clarify what I mean by that, Marx claimed that certain market forces would cause wealth to accumulate in fewer and fewer hands. He just didn't account for about a dozen other market forces. People don't care. They're to eager for an excuse to loot the filthy rich. But there's about a million times as many filthy rich people now as there were during Marx's day. And the poor in Western countries are not nearly as poor as the rural poor in Europe in his day. The great mass of people benefit from free, unrestricted, ungoverned, unregulated trade. A homeless guy by my home can swipe my card on his phone if I don't have change. It costs him nearly nothing.

So the problem, Bob, is that anti-capitalist tendencies don't just hurt you. You should stop being so selfish and greedy and just thinking about your six figure income only. Think about all the poor and homeless people that benefit from Capitalism. Don't send them back in to the past, the dark ages where no one was allowed to get too rich (except the state). The poor people won't survive the transition.
Mark, this will be my last post here as you have proven to me once again that conservatives eschew logical thought and facts, and can only rely on emotionality, dogma and personal attacks on character. You know absolutely nothing about me, yet you are absolutely convinced that you know everything about me. That is truely sad. "ENVY, ENVY, ENVY, Blah, blah, blah, Marxist, Marxist.... Great arguement.
Liberals live on emotional ploy and arguments justified by unsubstantiated facts. Nice try to flip it around. Envy was not the argument as much as a description that can bring meaning to why people would hate other people for their success for financial situation. Do you have a better justification for the liberal class warfare going on today?
+Bob Grant I know very little about you and didn't presume to. I never ascribed jealousy to you personally. I only addressed the policy you espoused. You repeatedly said that the culprit was greed. This is what I attacked, not you who I don't know. You seem to have all the pieces, you know that economic arguments should be impersonal and principle oriented, and that personal, ad hominem attacks, and emotions should not be the basis for the decision making process. But you seem to be having some trouble putting all the pieces together. And then you accuse me of each of those things.

This is the sloppy reasoning that, unfortunately, so many of us were raised on. It is not the path to a newer brighter future. We will not arrive at a healthy economic system or a rational moral code using these tactics. It is this type of reasoning that lets you go on at length with moral indignation and accusations of "GREED, GREED, GREED", but then lets your argument fall to pieces when I raise the ugly specter of ENVY.

This is the VERY ISSUE that divides our nation and threatens to throw us into a decade of instability or worse. There is no mechanism, institution, or foreordination that will prevent this from happening. We have to discourse and chose.
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