Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
Republicans love to talk about how high the U.S. corporate tax rate is, and how bad that is.
But when you examine their arguments, their case falls apart.
They predicate it on the fact that the current tax rate is 35 percent. But because of creative accounting and loophole sneaking, the actual rate that corporations paid last year was just 12.1 percent.
Many of our biggest companies paid nothing in corporate taxes, or even got rebates.
Take GE, for example. In the last decade, it made $81 billion in profits but paid only 2.3 percent in corporate income taxes. And over the last five years, it got $2.7 billion in rebates.
So for all the crying over how high the corporate tax rate is, it’s pretty much a myth. As Robert Reich points out, corporate taxes used to account for one out of every three dollars of federal tax revenue back in Eisenhower’s day. Now they account for only one out of every ten dollars.
And no less a knowledgeable person on corporate profitability than Warren Buffett says that “corporate taxes are not strangling American competitiveness.”
We don’t need to lower corporate taxes. We need to close the loopholes so they start paying their fair share.
Unfortunately, the Obama Administration has already proposed lowering the corporate tax rate to 28 percent, though he cushions that by proposing to close loopholes, as well.
What’s likely to happen, however, is that Congress will agree to lowering the corporate tax rate while closing few, if any, loopholes that corporations routinely use.
That’s how Washington works these days.
If you liked this story by Matthew Rothschild, the editor of The Progressive magazine, check out his story “Ron Paul Pummels Santorum in Debate."