Reader Requests: How Do Corporations Do-Do That Voodoo?

A reader asks: You claimed that the United States has an average corporate tax rate of 13.4 percent, despite a statutory tax rate of 35 percent. How did you calculate the “average” corporate tax rate?

Actually, I didn’t calculate it. The Bush Treasury did. They divided corporate taxes by corporate capital income.

Another reader asks: Do small corporations pay the same “average” or “effective” tax rate as bigger corporations?

Technically, small corporations are supposed to pay less in taxes. Like individual income tax rates, statutory corporate tax rates are progressive: 15 percent on the first $50,000 of income, 25 percent on income from $50,001 to $75,000, 34 percent on income from $75,001 to $10 million, and 35 percent on income above $10 million. (It gets way more complicated, but the details aren’t relevant here.)   Continue reading “Reader Requests: How Do Corporations Do-Do That Voodoo?”

Quote of the Day: Matthew Yglesias

The fact of the matter is just that running an economy is not the same as running a nationwide network of big box retailers, or a diversified conglomerate, or a large bank, or an innovative electronics company, or any other successful business. People generally understand this in reverse. Nobody ever said “Bill Clinton was a good president, so he’d be a great replacement for Bill Gates when he steps down at Microsoft.” But it’s true the other way ’round as well.

— Matthew Yglesias (Center for American Progress)

What to Read on Rick Perry and the “Texas Miracle”

State Growth Rates: How Was Your Recession? — Ryan Avent

Perry’s Growth Failure in Texas — Dean Baker

A Short Course in Miracles — Paul Krugman

Yes, Texas has added more jobs — but it has to, to keep up with population growth. And bear in mind that if you lose your job in Texas, there isn’t much of a safety net.

The Texas Omen — Paul Krugman

[The] Texas budget gap is worse than New York’s, about as bad as California’s, but not quite up to New Jersey levels.

Among the states, Texas ranks near the bottom in education spending per pupil, while leading the nation in the percentage of residents without health insurance.

Behind the Population Shift — Edward L. Glaeser

If economic productivity — created by low regulations or anything else — was causing the growth of Texas,…then [it] should have high per capita productivity and wages.

Low incomes and productivity in [Texas] strongly suggest that [its] expansion is not driven by outsize economic success.

More on the Texas Story — Paul Krugman

What could be causing that? [There] are two, not mutually exclusive stories: immigration and high birth rates among immigrants, leading to rapid population growth; and workers moving to Texas despite low wages because of cheap housing and a generally low cost of living.

ITYS Alert: Executive Compensation

Lately, I find myself trying to think of gentlemanly ways to say “I told you so” a lot. So I’m creating a new feature: the “ITYS Alert.” That way, I don’t have to say that cocky phrase, but you’ll know what’s coming. Trust me, I’m never happy to say ITYS because it’s always about bad things.

In the Washington Post, Steven Pearlstein opines over the growth of outrageous executive compensation, despite the weak economy:

The data from this spring’s proxy season is mostly in and it shows that after two years of decline, the average compensation for chief executives of the 500 largest U.S. corporations is on the rise again. According to Governance Metrics International, the average “total realized compensation”…was just under $12 million in 2010, up 18 percent from 2009…

This wasn’t supposed to happen.   Continue reading “ITYS Alert: Executive Compensation”

Quote of the Day: Christopher Caldwell

One Oklahoma bureaucrat complains that US authorities are trying to impose a “one-size-fits-all” regulatory regime. But one man’s one-size-fits-all is another man’s equality-under-the-law. Because it minimises compliance costs, simple regulation is exactly what a rational actor in a free market ought to want. The alternative — a jumble of authorities like the one that characterised the US banking system until 2008 — promotes jurisdiction shopping, regulatory arbitrage and one-off deals with interested legislators.

— Christopher Caldwell (Financial Times)

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