Where is the US economy headed?

Many make the mistake to quote tax rates rather than actual taxes paid vs GDP.

But Nobody Pays That
U.S. Business Has High Tax Rates but Pays Less
By DAVID KOCIENIEWSKI
Published: May 2, 2011


The United States may soon wind up with a distinction that makes business leaders cringe — the highest corporate tax rate in the world.


Honeywell International in Minnesota. In the last five years, the company said, about 22 percent of its profit went to income taxes.
But Nobody Pays That

A Wealth of Exceptions

Articles in this series will examine efforts by businesses to lower their taxes and the debate over how to improve the tax system.

Americans Favor Budget Cuts Over Raising Corporate Tax (May 3, 2011)
But Nobody Pays That: G.E.’s Strategies Let It Avoid Taxes Altogether (March 25, 2011)

Topping out at 35 percent, America’s official corporate income tax rate trails that of only Japan, at 39.5 percent, which has said it plans to lower its rate. It is nearly triple Ireland’s and 10 percentage points higher than in Denmark, Austria or China. To help companies here stay competitive, many executives say, Congress should lower it.

But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.

U.S. Business Has High Tax Rates but Pays Less

Commentary
Greece's Hat Trick: Tax Collection
Richard Murphy, 05.14.10, 02:30 PM EDT
If the tax owed in Greece was collected, almost all its problems could be solved.

One of the core issues at the heart of the Greek financial crisis is the enormous reluctance of the Greeks to pay tax. It's been estimated that the so-called shadow or black economy in Greece represents at least 30% of gross domestic product.

Average tax payments in Greece should, if tax were paid, be more than 30% of average income. So, when Greece's current deficit is running at just over 13% of its GDP it's easy to see that if 30% tax was collected on the 30% shadow economy, then the deficit would fall to about 4% of GDP overnight --very close to the target, which is 3%. In a nutshell, Greece's problems could be almost solved if only all tax due was paid.

Of course the issue is not as simple as that. No one, anywhere, at any time, has completely solved the problem of tax evasion. It would be quite unrealistic to claim it is possible to do so. But Greece is far from alone in facing this issue, even if it is doing so at a scale no other European country suffers.