Tuesday, April 6, 2010

Job Killing Tax Rates

According to Forbes, Exxon and GE Capital paid a whopping $0 of taxes in the United States last year. We could slash our nominal corporate tax rate (which is, to be fair, pretty high) if we just closed the loopholes that allow massively profitable companies to pay nothing, and, indeed, actually take money from the government in the form of subsidies. Our tax rate may nominally be progressive, but it is so complex and convoluted that the rich are able to dodge taxes that those less fortunate cannot. As a result, the tax system trends towards a flatter, more regressive form.

4 comments:

  1. Well, also to be fair, they did pay taxes in *other* countries. So it's not like they're not paying taxes of any type on their income anywhere.

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  2. I'm willing to wager that Exxon sold a lot more oil in the US than it did in the Cayman Islands. Companies should be paying taxes where they made their profits, not in whatever country functions as a tax haven.

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  3. There was a provision in the Emergency Economic Stabilization Act of 2008 that reduced the massive 199 deductions that Exxon had been taking. 199 (basically) lets you deduct up to 9% of your taxable income as long as it's derived from US sources. The new provision reduces the deduction for oil companies. It's not enough, but it's a step in the right direction.

    Are you familiar with the whole Black Liquor controversy? There are loopholes everywhere and when you try to patch one thing, you end up causing other, unforeseen issues. I'm all for convoluted tax laws though. It keeps me employed.

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  4. My comments thread has been taken over by accountants and lawyers! The horror!

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