Discount. The stated corporate tax rate is 39%. The effective rate? 12%
We're nearing the irs filing deadline, which means the tax whiners are in full cry. First up is the Tax Foundation, which annually declares a Tax Freedom Day--the day our national earnings to date will cover our annual tax bill. (Tax Freedom Day 2012 falls on April 17, which is also tax-filing day.) "This year, Americans will pay $2.62 trillion in federal taxes and $1.42 trillion in state-local taxes out of $13.86 trillion in income, for a 29.2% tax bill," said Tax Foundation economist-whiner Will McBride. "That means taxpayers will pay more in taxes in 2012 than they will spend on food, clothing and housing combined."
Well, of course we will. An F-35 costs more than a pair of Dockers. You can't run a discount court system to uphold our freedoms. Our tax rates are so oppressive that the number of millionaires increased to 3.1 million in 2010--up 240,000 from the prior year and exceeding the 2007 prerecession figure, according to the 2011 World Wealth Report from Merrill Lynch and Capgemini. May they each buy another house and a couple more cars. And some magazines.
I am absolutely thrilled to pay income taxes. It's a sure indication that I have income; not everyone is that fortunate. Since it's an election year, naturally there's a fight about tax rates. President Obama wants to apply the Buffett rule to raise taxes on people who earn $1 million or more. Fine by me; it would help cut the deficit. Mitt Romney, whose tax rate was 15.4% last year, would rather cut spending than force his fellow millionaires to cough up more dough.
When it comes to corporate taxes, you can always count on whining from the U.S. Chamber of Commerce. The chamber won't be satisfied until the federal tax rate is zero, the EPA is dead and our children are back working in the coal mines at market rates. "In just a few days, the United States will hold the dubious distinction of having the highest corporate tax rate (39%) in the world," cried the chamber's executive vice president of whining about government policy, Bruce Josten. He neglected to mention that U.S. companies' effective tax rate--what they actually pay--is something on the order of 12%. I paid twice that last year. ExxonMobil has been paying an effective tax rate under 18%. Last year it earned $41 billion. Exxon must not find the current code all that taxing.
Our world-beating rate gets blamed for a lot of things. "Yet Americans still wonder why businesses are sending our jobs overseas," observed Malcolm Out Loud, some guy from Fox News. Did I mention which country has the lowest tax rate? Ireland. The Emerald Isle of disaster. How are things in dear old Donegal? In recession. Again. Another country that has among the lowest tax rates is Iceland, the frozen island of disaster. Malcolm must think we've been outsourcing jobs to Reykjavk. And what country shares Iceland's rank? Greece! Your witness, Malcolm.
Now let's look at the countries with the highest rates: the U.S., Japan, France, Belgium and Germany, Europe's leading economy. The Germans have indeed lowered their statutory corporate rate from 39% to 30% over the past 10 years. But the Germans collect at the 30% rate. Just imagine the lobbying that would commence if Congress targeted the tax loopholes that Chamber of Commerce industries have carved out for themselves.