Quick Fact: MacCallum, Angle ignore effective corporate tax rate to claim U.S. has the "second highest rate" in industrialized world
Research ››› ››› GREG LEWIS
On Fox News, Martha MacCallum claimed that "U.S. corporations overall face an average combined tax of about 39%," adding that this was "the second highest rate among all industrialized countries." Fox News Washington correspondent Jim Angle later added that U.S. taxes "punish savings and investment more than the Europeans do in all sorts of way" and that China has "a 25% corporate tax rate, well below the U.S. rate of about 40%."
From the December 1 edition of Fox News' The Live Desk:
MACCALLUM: Later this week, President Obama is going to hold a jobs summit, asking folks who actually run some of the big businesses in this country for advice. And they may want to talk to the president about the impact of corporate taxes and how U.S. taxes compare with other nations. This is an important element to companies across the country, and U.S. corporations overall face an average combined tax of about 39 percent. That is the second highest rate among all industrialized countries. It is just behind the tax rate in Japan.
ANGLE: Although U.S. income taxes are lower than Europe, we have other taxes that are higher than the Europeans as you just mentioned, and oddly enough, they punish savings and investment more than the Europeans do in all sorts of ways.
ANGLE: It's amazing. We're talking about China, of course, the world's most populous nation. Once a bastion of communism, and it now has better incentives for job creation than the U.S. does in terms of taxes. China looked at what had worked in other countries, including the U.S., and devised a tax system to encourage savings and investment. They have no tax on bank interest, no tax on capital gains on stocks listed on their exchange, and perhaps most important, they have a 25 percent corporate tax rate, well below the U.S. rate of about 40 percent. So the former communists are beating us, as some say, at our own game.
Fact: US effective corporate tax rate significantly lower than its statutory rate
As Media Matters for America has noted, according to an August 2008 report by the Government Accountability Office (GAO), "Statutory tax rates do not provide a complete measure of the burden that a tax system imposes on business income because many other aspects of the system, such as exemptions, deferrals, tax credits, and other forms of incentives, also determine the amount of tax a business ultimately pays on its income." In the report, the GAO estimated that "[t]he average U.S. effective tax rate on the domestic income of large corporations with positive domestic income in 2004 was an estimated 25.2 percent." Moreover, in June 2007, the Treasury Department concluded: "If the revenue from tax preferences were used to lower the corporate tax rate, the rate could be lowered from 35 percent to 27 percent while producing approximately the same revenue."
Fact: World Bank study found U.S. effective corporate lower than those of several industrialized nations, including China
In its Paying Taxes 2009 publication, based on its 2009 Doing Business report, the World Bank-International Finance Corporation estimated that the United States has a lower effective rate of current corporate tax than that of several other nations, including Germany, Canada, India, China, Brazil, Japan, and Italy. The publication also included a figure that compared effective and statutory corporate tax rates for several G8 and BRIC [Brazil, Russia, India, China] countries: