Statutory v. Effective Tax Rates

Here’s an interesting article touching on the subject of corporate tax reform. While it correctly notes that this is an area where Left and Right might find common ground, it also talks about the main hang up in getting a deal done.

…Democrats, Republicans and corporations are interested in pushing one half of reform, the part about lowering the nominal corporate tax rate to European levels. [There is, though,] reason to doubt that Republicans or corporations are interested in the other half of reform, the part about eliminating the loopholes and gimmicks that currently ensure American companies actually pay less in taxes than their European counterparts.

I like the last line in that quote, along with the chart in the article, to rebut those conservatives who harumph that American corporations have the highest tax rates in the universe. The comeback is that they end up paying the third lowest amount. So the issue in reform is really the loopholes, isn’t it? In the end, it seems, a deal is only going to be possible, as the article points out, “so long as it cuts taxes and increases the deficit.”

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