Last summer, President Obama said in L.A. that, “My attitude is I don’t care if it’s legal — it’s wrong. And my attitude is, is that nobody begrudges our companies from turning a profit — we want them to be profitable. And in a global economy, there’s nothing wrong with companies expanding to foreign markets. But you don’t get to pick the tax rate you pay.”
Corporate taxes have been somewhat of a hot topic, as the majority of us members of the middle and upper-middle class are up to our necks in taxes (excuse the dramatic sentiment) and corporations use tactics such as inversion and transfers to get large breaks on tax bills. It makes some feel as though the little guy is being hounded while Goliath is receiving breaks left and right.
A report by the Tax Foundation confirmed the idea that U.S. corporations are subject to the highest income tax rate in the world. When you combine the 35% federal rate to the average state levied rate of 4.1%, the combined rate of 39.1% is well above the OECD simple average of 25%.
In spite of this, as many people are already aware, there are a lot of corporations that are supposed to pay a top rate, but don’t actually pay anywhere close to it. Some of the most profitable companies in the country pay a lower tax rate than we would ever imagine.
Citizens for Tax Justice (CTJ) is a “public interest research and advocacy organization focusing on federal, state, and local tax policies and their impact upon our nation.” Although a bit left-leaning, the organization offers some valuable insight on tax topics. CTJ recently published a report on corporate tax rates across fortune 500 companies. It found that some companies paid less than zero federal income taxes during 2008 to 2012, meaning they paid less than most middle class families.