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Math and Corporate Taxes
I just love hearing people who argue that the corporate tax burden in the United States is too high. GE, as an example didn't pay any corporate taxes in 2010, and was eligible for a refund, but there aren't any flaws in our system. People talk about the crushing 35-45% corporate tax rate, much of which is allegedly collected by the Federal Government, but let's throw out some truth. I did some number crunching, and by no means is this super scientific, but it's based on publicly available information. First, I set out to find out how much the federal government collected in tax revenue from corporate taxes in 2010.
$191.4 billion(1). Wow! That's a lot of money. About $1.7 trillion was paid by individual taxpayers between income and social insurance taxes as well(1), so the $191.4 billion doesn't seem like a lot.
Now, with a 35% tax rate, we can do the algebra: 0.35x = 191.4 billion. x/0.35 = 191.4 / 0.35. x = 546.9 billion. Thus, we would expect that American corporations profited approximately $546.9 billion in 2010.
What actually happened? Well, according to the New York Times, US corporate profits in 2010 were the highest ever at $1.659 trillion(2). To make it simple, I'll convert the billions to trillions. $191.4 billion actually paid= 0.1914 trillion. 0.1914 / 1.659 (actually made) = about 11.5%, which means effectively, the US has one of the LOWEST tax rates in the world for corporate entities(3).
References: 1- http://www.cbo.gov/ftpdocs/120xx/doc12039/HistoricalTables%5B1%5D.pdf 2 - http://www.nytimes.com/2010/11/24/business/economy/24econ.html 3- http://en.wikipedia.org/wiki/Tax_rates_around_the_world