Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Representative Mica (R-Fla) Distorts on Corporate TaxesRepresentative Mica Distorts on Corporate TaxesThis issue's Dr. Dollar answers a question from Sandra Holt, a constituent of Congressman John Mica, who represents the 7th congressional district in Florida. A visit to Mica's official U.S. House of Representatives website confirms Sandra's suspicion that her member of congress is engaged in double talk on corporate taxation. On a page entitled "Protecting Jobs and the Economy," Mica says that he supports: "... efforts to spur business activity and keep more jobs here at home by reducing the corporate income tax. The United States has one of the highest corporate income tax rates, especially when compared to many of our primary economic competitors, such as Britain, France and Germany. Higher taxes on the returns to corporate capital inhibit the competitiveness of U.S.-based companies in foreign markets. With such a high tax burden to bear, many corporations are unfortunately attempting to cut costs by relocating abroad and taking good-paying jobs with them. Instead of punishing businesses for attempting to make a profit, I believe we need to reduce their incentive to sacrifice American jobs by lowering corporate income taxes." [Emphasis added.]But as Ramaa Vasudevan shows in her Dr. Dollar column, corporate taxes in the United States are not high compared to other developed countries: "Is the U.S. corporate tax burden higher that that of its competitors? Comparisons of 29 developed countries reveal that only three—Iceland, Germany, and Poland— collected less corporate income tax as a share of GDP than the United States. This represents a reversal from the 1960s, when corporate income tax as a share of GDP in the United States was nearly double that of other developed countries."Nor are corporate taxes burdensome: In 2002-03, U.S. corporations paid an effective tax rate of only about 23%. Forty-six large corporations, including Pfizer, Boeing, and AT&T, actually received tax rebates (negative taxes)! Far from being a crushing burden, corporate income tax in the United States has fallen from an average of nearly 5% of GDP in the fifties to 2% in the nineties and about 1.5% (projected) in 2005-2009.We submitted the following to the comment section on Mica's website: Dear Representative Mica, We eagerly await a response from the congressman. Labels: "double taxation", corporate taxes, dividend tax, John Mica |
