@Cycloptichorn,
Cycloptichorn wrote:
I didn't make the argument that US corporations are undertaxed at all, actually.
My point is, whether it is a matter of rates of taxation or 'normal and legal' tax loopholes and accounting, many if not most corporations are not overtaxed and there's not a lot of evidence that cutting their taxes is the right thing to do.
Of course, pro-business advocates argue that it is the right thing to do...
Cycloptichorn
That at least is a testable and arguable proposition. "overtaxed and undertaxed" are judgements that imply a host of side issues relating to the desired size and intrusiveness of government in economic activities, and the desired distribution of whatever tax burden is chosen over individuals and businesses. In general it is how one evaluates those two basic questions that determines one's view as to whether corporations are overtaxed or undertaxed. Different points of view can lead to different, but still rational, conclusions.
So far the discussion here hasn't really touched on those basic (and arguable) questions. Instead we have been presented with biased polemics, based on unsupported statistics, taken out of context and misused to support the completely unfounded proposition that U.S. corporations are surely and significantly undertaxed both absolutely and relatively compared to their foreign counterparts. The proposition was presented as a matter of verifiable fact when the truth is it isn't a fact at all, and the question really involves several value judgements about which reasonable people can disagree.
My consulting company is owned 50% by a small group of managers of which I am one and 50% by an ESOP (employee stock ownership plan). The ESOP is represented by a third party trustee who oversees the evaluation of the company stock in its internal market, expressly for the benefit of the ESOP participants (all our employees). The company is governed by its management Board, but is compelled by law to treat the ESOP stockholders exactly as any other. Each year we contribute a stipulated % of salary to each employee in the form of vested company stock, which can be sold to the company when an employee leaves or retires or kept, at his/her discretion. Our books are audited by a third party (as in any company) and open for all to see and review.
We have very good tax lawyers and accountants who work hard to minimize our tax and liability exposure. During the last five years we have paid anywhere from 38.5 to 40.0 % of our pretax profits (including interest earned) as income tax. In addition, and unlike in some other countries, we pay a standard payroll tax equivalent to about one third of our pretax profits that is deducted as a cost before the profits themselves are calculated. We are doing very well now, but did have some substantial losses due to poor management about eight years ago. We have reduced our recent tax burden a bit by an accounting carry forward of portions of those losses to reduce the taxable profits of subsequent years.
This situation is also true of most consulting and professional service companies in the country in fields ranging from science and engineering to business management, accounting, IT services and many others. Are we and they undertaxed? overtaxed? The answer clearly depends on the level of taxation favored by the one making this judgement as well as his preferences for the optimal distribution of this taxation to individuals and corporations.
The question as to whether in the large universe of "corporations" of various kinds and subject to a variety of income tax laws (including no such tax at all) there are some having certain assets and sales that pay no taxes or very little, proves nothing at all with respect to these questions. That some people use this information in an attempt to "prove" something merely suggests that they are either ignorant of the facts; don't understand them; or are deceptively manipulating them to rationalize some preconceived opinion.
