Tuesday, July 8, 2014

Corporate tax dodges are un-American (Fortune)

By the way, Robert Reich just wrote a piece about Walgreen's plan to do a tax inversion. He noted [emphasis mine]:

It’s true that the official corporate tax rate of 39.1 percent, including state and local taxes, is the highest among members of the Organization for Economic Cooperation and Development.

But the effective rate – what corporations actually pay after all deductions, tax credits, and other maneuvers – is far lower.

Last year, the Government Accountability Office, examined corporate tax returns in detail and found that in 2010, profitable corporations headquartered in the United States paid an effective federal tax rate of 13 percent on their worldwide income, 17 percent including state and local taxes. Some pay no taxes at all.

Now read from a conservative publication like Fortune why these tax dodges by "American" companies have gone way too far....

UPDATE (07/09/2014):  In response to this post my Uncle T. freaked out, saying I was being manipulated by statistics.  For some reason he thought the "effective tax rate" of a company was calculated on income before expense deductions, i.e. gross profit.  

But I pointed out to to him that, according to the GAO report cited by Reich, "The most common measure of income for these estimates has been some variant of pretax net book income."

So the starting point for calculation is net profit before taxes, not gross profit, just in case anybody else shared my uncle's confusion.

By  Allan Sloan
July 7, 2014 | Fortune 

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