Proposed Changes In The Corporate Tax Rate
Today, the Obama administration proposed reworking the corporate tax code. According to the Wall Street Journal, the proposal would lower the tax rate for corporations to 28 percent from 35 percent, but overall the plan would raise the amount of taxes collected by the federal government. How can this be? How can you lower the tax rate and collect more revenue? Even though the current tax rate is 35 percent, popular deductions and credits actually lower the effective tax rate (in other words, the tax rate that corporations actually pay in taxes). Currently, the effective tax rate is estimated to be between 22 and 27 percent.
As we mentioned in our handy fact sheet on taxes:
- When a person hears the discussion of the corporate tax rate, it is usually in context of the highest rate. For corporations that earn profits greater than $18,333,333, they are taxed at the top rate of 35 percent.
- But due to the complexity of the tax code, credits, and deductions, among other reasons, virtually no one pays the top tax rate of 35 percent.
- The effective tax rate, which accounts for all “deductions, credits, depreciation, and preference in the tax code,” is estimated to be between 22 and 27 percent.
- No matter if you are looking at the actual rate or the effective rate of taxes, “the United States has one of the highest corporate tax rates in the industrialized world.”
BA
Here’s an idea, eliminate ALL of the credits, deductions, loop holes and bogus measures that have turned the tax code into a labyrinth. Then set a simple tax rate that’s clear and concise, and applies to all companies regardless of industry or product and is based on profits.
My idea is as follows: First Repeal the 16th Amendment or amend it to eliminate the progressive tax code we have. Institute a flat tax of 7% for federal and pas a law that local and state taxes cannot exceed 8%. Return the Congress to being bound by the limits of the Constitution, return federal agencies that are outside the scope of Constitutional authority to the States so, the federal government won’t need a higher tax rate. Every individual/family/corporation pays up to and not more than (depending on their state’s needs) the 15%. No loopholes, no deductions and no refunds. If you work, you pay. If you don’t work, no extras at tax time; what you get is what you get. A refund for people who don’t pay income tax to begin with is just more welfare.
duh, by closing loopholes so EVERY business pays taxes… reference GE actually getting money back from the Fed!!!
It is pure mathmatics and common sense. No need to go on.