Minor Axis
Well-Known Member
...and the politicians who act as enablers. This article is from 2003. Today Corporate tax revenue is at historically low levels. The Decline of Corporate Revenues at the Center on Budget and Policy Priorities. Read it and then tell me what possible incentive exists for large multi-national corporations to become part of the solution for funding the budget of the United States of America? I say there is no incentive short of using a stick on them because they want all of the little people to give them a free ride while they export as many jobs as possible.
The Decline of Corporate Income Tax Revenues
Revised October 24, 2003
Corporate income tax revenues are sensitive to economic conditions, and the recent slowdown in the economy has played a significant role in the collapse of corporate revenues. But the economy explains only part of the decline. Tax cuts for corporations enacted over the past few years have also contributed significantly. Based on Joint Committee on Taxation estimates, provisions enacted in 2002 and 2003 reduced taxes for businesses by over $50 billion in 2003, and corporations are by far the largest beneficiaries of these tax breaks.
Corporate revenues are further diminished by aggressive tax avoidance strategies, including the sheltering of corporate profits overseas. No precise estimates of the extent of these tax shelter activities exist. In testimony before the Senate Finance Committee in March 2000, the Joint Committee on Taxation stated that “the data are not sufficiently refined to provide a reliable measure of corporate tax shelter activity.” Using the evidence that is available, however, the Joint Committee concluded that “there is a corporate tax shelter problem” and that “the problem is becoming widespread and significant.” Similarly, former IRS Commissioner Charles Rossotti identified abusive corporate tax shelters as "one of the most serious and current compliance problem areas." Internal IRS studies on tax sheltering, recently disclosed by the General Accounting Office, indicate that “tens of billions of dollars of taxes are being improperly avoided and the potential for the proliferation of abusive tax shelters is strong.”
Long-term Decline in Corporate Revenues
Other recent analyses have examined the stunning deterioration in the budget outlook, as well as the large, persistent deficits that now loom as far as the eye can see and that will swell further as the baby boom generation retires. In this analysis, we seek to provide context for the upcoming Congressional debate on corporate tax cuts, by examining trends in corporate tax revenues over recent decades. The analysis includes the following findings:
Revised October 24, 2003
Corporate income tax revenues are sensitive to economic conditions, and the recent slowdown in the economy has played a significant role in the collapse of corporate revenues. But the economy explains only part of the decline. Tax cuts for corporations enacted over the past few years have also contributed significantly. Based on Joint Committee on Taxation estimates, provisions enacted in 2002 and 2003 reduced taxes for businesses by over $50 billion in 2003, and corporations are by far the largest beneficiaries of these tax breaks.
Corporate revenues are further diminished by aggressive tax avoidance strategies, including the sheltering of corporate profits overseas. No precise estimates of the extent of these tax shelter activities exist. In testimony before the Senate Finance Committee in March 2000, the Joint Committee on Taxation stated that “the data are not sufficiently refined to provide a reliable measure of corporate tax shelter activity.” Using the evidence that is available, however, the Joint Committee concluded that “there is a corporate tax shelter problem” and that “the problem is becoming widespread and significant.” Similarly, former IRS Commissioner Charles Rossotti identified abusive corporate tax shelters as "one of the most serious and current compliance problem areas." Internal IRS studies on tax sheltering, recently disclosed by the General Accounting Office, indicate that “tens of billions of dollars of taxes are being improperly avoided and the potential for the proliferation of abusive tax shelters is strong.”
Long-term Decline in Corporate Revenues
Other recent analyses have examined the stunning deterioration in the budget outlook, as well as the large, persistent deficits that now loom as far as the eye can see and that will swell further as the baby boom generation retires. In this analysis, we seek to provide context for the upcoming Congressional debate on corporate tax cuts, by examining trends in corporate tax revenues over recent decades. The analysis includes the following findings:
- Although taxes paid by corporations, measured as a share of the economy, rose modestly during the boom years of the 1990s, they remained sharply lower even in the boom years than in previous decades. According to OMB historical data, corporate taxes averaged 2 percent of GDP in the 1990s. That represented only about two-fifths of their share of GDP in the 1950s, half of their share in the 1960s, and three-quarters of their share in the 1970s.
- The share that corporate tax revenues comprise of total federal tax revenues also has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s.
- The effective corporate tax rate — that is, the percentage of corporate profits that is paid in federal corporate income taxes — has followed a similar pattern. During the 1990s, corporations as a group paid an average of 25.3 percent of their profits in federal corporate income taxes, according to new Congressional Research Service estimates. By contrast, they paid more than 49 percent in the 1950s, 38 percent in the 1960s, and 33 percent in the 1970s.
- Corporate income tax revenues are lower in the United States than in most European countries. According to data from the Organization for Economic Cooperation and Development, total federal and state corporate income tax revenues in the United States in 2000, measured as a share of the economy, were about one-quarter less than the average for other OECD member countries. Thirty-five years ago, the opposite was true — corporations in the United States bore a heavier burden than their European counterparts.
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