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?”

Chandra Mishra Rides Astride a Trojan Horse

When Professor Mishra and I debated the Bush tax cuts a few weeks ago, we agreed to limit the debate to income taxes, but the Professor went a bit off-topic. He spent half his op-ed talking about corporate taxes, and I didn’t get a chance to respond.

Until now.

First, let’s see what I’m responding to:

A high corporate tax rate moves jobs overseas. Currently American companies are sitting on more than $2 trillion of cash overseas, which is used for hiring and investments in foreign operations.

The United States has the second highest corporate tax rate in the world. Two things we must do to spur job growth and expand the taxpayer base in the America: Cut the corporate tax rate from 35 percent to 20 percent, the median tax rate for the developed countries, and eliminate the taxes on repatriation of foreign earnings.

Wow. Every sentence there is either wrong or very misleading.   Continue reading “Chandra Mishra Rides Astride a Trojan Horse”