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?”