Marc Erickson

Marc Erickson
Vancouver, BC, Canada
February 14
I'm a Canadian with American, Estonian, Swedish, and Canadian grandparents. My tech writing can be found here:

Marc Erickson's Links

DECEMBER 9, 2011 4:57PM

The American High Corporate Taxes Myth

Rate: 2 Flag

Although the statutory corporate tax rate in the US is 35%, very few corporations pay this rate. A story from MSN Money quoting a Business Week story says that CMS Energy, Chesapeake Energy, Boeing, Broadcom, FPL Group, Allegheny Energy, Citizens Communications, American Capital Strategies, Akamai Technologies, and DirecTV were the top corporate tax evaders in 2006 and none had a 5-year average tax rate higher than 2 per cent. Notice that some of these are multinationals and can and do structure their earnings so that high earnings happen in countries with lower tax rates and vice versa (e.g. Broadcom, Boeing).

And if they can keep the cash overseas for long enough, they can always get a tax repatriation holiday passed as happened in 2004. WIN America is leading a campaign for another tax repatriation holiday, despite a Senate report finding that the "...15 companies that benefited the most from a 2004 tax break for the return of their overseas profits cut more than 20,000 net jobs and decreased the pace of their research spending..."

I often install drivers for Broadcom networking chips on computers I work on - and last I heard, Boeing just released a new airplane (the 787) that is expected to be the leader in its field due to its high technology. It cost billions to develop - I doubt they would do that if they were worried about their tax bill.

The Corporate Taxpayers & Corporate Tax Dodgers, 2008-2010 report states, "Most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation." (Page 1). Of the 280 companies studied for the report, the average effective tax rate was about 18.5% and only about 25% of them had an effective tax rate (30%) that was close to the statutory prescribed rate. A low effective corporate tax rate is the norm for state taxes also:  Corporate Tax Dodging in the Fifty States, 2008-2010.

The problem isn't a hostile environment for business in the US - with the exception of environmental standards and automobile safety regulations, US business has received virtually everything it's desired from government since 1970 - especially the financial industry. Rather, thanks to treaties such as GATT revisions and NAFTA, and the World Trade Organization, government policies designed to ensure employment and good jobs for Americans and Canadians have been removed for businesses promises of more employment.

What actually happened is that good paying jobs were exported to areas where labour costs are lower - thus destroying them in North America - and this has increased corporate profits. Corporations advocate for policies that are in their own best interests - and their interests and the population's interests aren't necessarily aligned. NAFTA was spectacular for corporations and great for the Mexican, either neutral or negative for the Canadian, and negative for the American population. And a corporation's voice when asking for policy changes is usually louder than an ordinary person's due to the amplifying effect of money (advertising, think tanks, and studies).

I've a reading list for anyone interested in how badly the corporate policy tilt by government has affected the middle class: Nickel and Dimed: On (Not) Getting By in America by Barbara Ehrenreich; Griftopia: Bubble Machines, Vampire Squids, and the Long Con That is Breaking America by Matt Taibbi; The New Bureaucracy: Waste and Folly in the Private Sector by Herschel Hardin; Not a Conspiracy Theory: How Business Propaganda Hijacks Democracy by Donald Gutstein; The Corporation: The Pathological Pursuit of Profit and Power by Joel BakanAge of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present by Jeff Madrick; and  The Shock Doctrine - The Rise Of Disaster Capitalism by Naomi Klein.

I also recommend reading Matt Taibbi's blog and stories on and Andrew Leonard's stories on  Canadians may also find these Herschel Hardin books of interest: A Nation Unaware: The Canadian Economic Culture and Closed Circuits: The Sellout of Canadian Television.

Your tags:


Enter the amount, and click "Tip" to submit!
Recipient's email address:
Personal message (optional):

Your email address:


Type your comment below:
I am not well-versed in economics; however, I think you hit the nail right on the head with this statement:

"What actually happened is that good paying jobs were exported to areas where labour costs are lower - thus destroying them in North America - and this has increased corporate profits."

It's the exploitation by large corporations of cheap labor in poor countires that's driving US and Canada to unemployment on their own turf. I hope that makes sense.

Thank you for all the links related to this topic.

An important addition for your reading list: The Betrayal of American Prosperity by Clyde Prestowitz (available from Amazon or in audio from, which is how I prefer it). Rather than repeat myself about this, I'll just point you to a detailed comment I wrote on Reddit, which contains a pointer to a sample of the book online that's quite interesting—the chapter called Companies Without a Country. It's a fascinating book generally, so I recommend getting the whole book to read. But I liked that chapter especially.