Friday, January 28, 2011

NYT on divergence between statutory and effective tax rates

From an editorial in today's New York Times:

Satisfying business interests can be tricky. Mr. Obama wants, for example, to reduce the 35 percent top corporate tax rate. That might sound like music to corporate ears, but it could easily run into powerful opposition. That’s because the president has rightly linked the reduction in the marginal tax rate to closing the loopholes in the tax code that allow many corporations to pay much less in taxes than they should.

Despite the high corporate tax rate, taxes on corporate income only raise an amount equal to 2.1 percent of the gross domestic product. That is way below the 3.5 percent of G.D.P. raised, on average, across the Organization for Economic Cooperation and Development.

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