Found It! Bush Tax Cuts Worth Only $98 Billion in 2011

[fskimospy]

The chart on page three of your link shows the US at an effective rate of 27.1% versus the remainder of the OECD at an effective rate of 23.3%. It also shows marginal differences of up to 6%. It's only when we "weight" the other nations' rates to "indicate their relative importance" that we look better. This is the same shit that drives NASA to show global warming by changing temperatures measured far in the past - the idea that we can simply manipulate numbers to make ourselves look better.

On what basis do you believe the nonpartisan, non policy prescriptive Congressional Research Service is doing this in order to 'make the US look better'? This is just another example of dismissing inconvenient information.

Regardless of what you think, it shows that the US rate is most certainly not 39%.

 

[fskimospy]

The above is a poor metric for examining and comparing tax rates etc among countries.

The point of the whole subject is the affect tax rates have on encouraging or discouraging investment in a country, or outsourcing etc.

As your article admits:



The bulk of US companies are purely domestic, they have no option to shift profits internationally. Moreover, many of them are quite small and will never reach the higher bracket(s), thus skewing the effective tax rate lower.

To be useful, an analysis of this type - if it is indeed trying to determine the influence of tax rates on international profit or operations shifting etc. - should focus only on those companies large enough to participate in that.

And determining effective rates by comparing taxes to GDP introduces many questions which remain unaddressed in this study. E.g., GDP includes unincorporated business. Unincorporated business don't pay 'corporate taxes', how the heck is that factored in? We also have many businesses set up as LLCs or S-corps, neither of which pay corporate taxes (it is taxed at the shareholder/owner level), how is that factored in?

I've personally seen many corporate tax returns, they ARE paying at the marginal tax rate of 35% (or even 39%), and this doesn't include state income taxes etc.

Use of such broad indicators with mostly unexplained adjustments is a poor tool IMO. We need something better.

Fern

So? Some businesses may be paying that rate, but on the average they are not. That's what those numbers mean. Many of these other countries have similar graduated tax structures to ours, and all countries are measured equally. Your suggestions mostly seem to be adding in arbitrary cutoffs and metrics that would decrease the explanatory power here, not increase it.

 

[werepossum]

On what basis do you believe the nonpartisan, non policy prescriptive Congressional Research Service is doing this in order to 'make the US look better'? This is just another example of dismissing inconvenient information.

Regardless of what you think, it shows that the US rate is most certainly not 39%.

It's not inconvenient, merely wrong. As Fern alludes, this is a horrible metric because it throws in the relatively high rate countries at a higher impact. But corporations looking to place a new plant or even locate a headquarters don't look at the average or even the weighted tax rate, they look at the individual tax rates. This study would be relevant only if corporations were somehow forced to divide taxable activity evenly relative to this weighted metric.

As to why I would discount it - just as a politician's highest priority is his own re-election and advancement, so is government's first function the protection and advancement of government.

 

[sandorski]

Corporate Tax Rates are really the only Tax Rates that should be Cut. Personal Income Tax on the higher end is where there should be no Tax Cuts and even Increases. At this time anyway, until the Deficit can be eliminated.

 

[Fern]

So? Some businesses may be paying that rate, but on the average they are not. That's what those numbers mean. Many of these other countries have similar graduated tax structures to ours, and all countries are measured equally. Your suggestions mostly seem to be adding in arbitrary cutoffs and metrics that would decrease the explanatory power here, not increase it.

On average they are not?

Of course they aren't, the average company doesn't make anywhere near the kind necessary to hit those top rates.

But IMO the whole point of this is not the 100's of thousands of small companies that only do business domestically; it is the effect on larger multinationals.

So, to include these thousands of small companies in the stats and then try to declare higher rates can't possibly have an affect because those rates don't really exist is absurd.

Those higher rates only exist if you're a bigger company which may have to pay them, so include only those in the study. Let's see what they pay before we 'jiggle' the stats with irrelevant small companies.

There is nothing arbitrary in weeding out irrelevant data to get a clearer picture.

Fern

 

[MomentsofSanity]

On average they are not?

Of course they aren't, the average company doesn't make anywhere near the kind necessary to hit those top rates.

But IMO the whole point of this is not the 100's of thousands of small companies that only do business domestically; it is the effect on larger multinationals.

So, to include these thousands of small companies in the stats and then try to declare higher rates can't possibly have an affect because those rates don't really exist is absurd.

Those higher rates only exist if you're a bigger company which may have to pay them, so include only those in the study. Let's see what they pay before we 'jiggle' the stats with irrelevant small companies.

There is nothing arbitrary in weeding out irrelevant data to get a clearer picture.

Fern

So let's see what rate the big companies are paying.

http://www.businesspundit.com/25-corporations-that-pay-less-taxes-than-you-do/

 

[werepossum]

The above is a poor metric for examining and comparing tax rates etc among countries.

The point of the whole subject is the affect tax rates have on encouraging or discouraging investment in a country, or outsourcing etc.

As your article admits:



The bulk of US companies are purely domestic, they have no option to shift profits internationally. Moreover, many of them are quite small and will never reach the higher bracket(s), thus skewing the effective tax rate lower.

To be useful, an analysis of this type - if it is indeed trying to determine the influence of tax rates on international profit or operations shifting etc. - should focus only on those companies large enough to participate in that.

And determining effective rates by comparing taxes to GDP introduces many questions which remain unaddressed in this study. E.g., GDP includes unincorporated business. Unincorporated business don't pay 'corporate taxes', how the heck is that factored in? We also have many businesses set up as LLCs or S-corps, neither of which pay corporate taxes (it is taxed at the shareholder/owner level), how is that factored in?

I've personally seen many corporate tax returns, they ARE paying at the marginal tax rate of 35% (or even 39%), and this doesn't include state income taxes etc.

Use of such broad indicators with mostly unexplained adjustments is a poor tool IMO. We need something better.

Fern

Just as Hendrixfan pointed out how those low income wage earners receiving EIC skew the number of people paying no federal taxes, so does the effective tax rate skew the tax rate paid by successful companies (i.e. those looking to hire and/or expand.) General Electric having a buttload of lobbied tax credits and losses to offset earnings and thus paying no income tax in no way helps the small manufacturing business with no lobbyists who would like to expand operations; he still pays the nominal rate less a few generic exemptions. With large multinational corporations it might be the difference between opening a new plant in America versus in Hungary, but with a smaller domestic corporation it might be the difference between being able to raise the money for a new manufacturing line and not, or between being able to expand to produce a new widget or having a competitor manufacture that widget in China and bring it to market. All money taken out of corporations is taken from potential growth or dividends.

 

[fskimospy]

On average they are not?

Of course they aren't, the average company doesn't make anywhere near the kind necessary to hit those top rates.

But IMO the whole point of this is not the 100's of thousands of small companies that only do business domestically; it is the effect on larger multinationals.

So, to include these thousands of small companies in the stats and then try to declare higher rates can't possibly have an affect because those rates don't really exist is absurd.

Those higher rates only exist if you're a bigger company which may have to pay them, so include only those in the study. Let's see what they pay before we 'jiggle' the stats with irrelevant small companies.

There is nothing arbitrary in weeding out irrelevant data to get a clearer picture.

Fern

Are you claiming that the US has a higher proportion of domestic companies than the other OECD countries? What are you basing this on? What are the criteria you would use for whether or not a country meets your standard for portability? Should it be measured in assets? In revenues? Certain kinds of revenues? Should an auto manufacturer with X revenues and assets be considered immobile while a software company with far less be considered mobile? How will you comb the US statistics in order to separate these out?

Do you see why what you're asking for isn't actually feasible and would require arbitrary distinctions?

 

[fskimospy]

It's not inconvenient, merely wrong. As Fern alludes, this is a horrible metric because it throws in the relatively high rate countries at a higher impact. But corporations looking to place a new plant or even locate a headquarters don't look at the average or even the weighted tax rate, they look at the individual tax rates. This study would be relevant only if corporations were somehow forced to divide taxable activity evenly relative to this weighted metric.

As to why I would discount it - just as a politician's highest priority is his own re-election and advancement, so is government's first function the protection and advancement of government.

You think the CRS acts to further the perpetuation of government? What on earth could you possibly be basing this on?

This is just a continuation of the bizarre dismissal of expert opinion based on vague accusations of some nefarious agenda. I'm sorry you guys don't like some of the best quality information out there.

 

[Fern]

-snip-
But corporations looking to place a new plant or even locate a headquarters don't look at the average or even the weighted tax rate, they look at the individual tax rates.

Good point because it's true.

Companies looking to make a decision don't look at this average stuff. They do a detailed analysis of how they (specifically) will be impacted. They quantify it. Averages are of no use.

Fern

 

[fskimospy]

Good point because it's true.

Companies looking to make a decision don't look at this average stuff. They do a detailed analysis of how they (specifically) will be impacted. They quantify it. Averages are of no use.

Fern

And when a million companies move a million times the averages become quite important. Central Limit Theorem FTW.

 

[Fern]

Are you claiming that the US has a higher proportion of domestic companies than the other OECD countries? What are you basing this on? What are the criteria you would use for whether or not a country meets your standard for portability? Should it be measured in assets? In revenues? Certain kinds of revenues? Should an auto manufacturer with X revenues and assets be considered immobile while a software company with far less be considered mobile? How will you comb the US statistics in order to separate these out?

Do you see why what you're asking for isn't actually feasible and would require arbitrary distinctions?

To get a clear accurate picture will be hellishly complicated, however that in no way justifies the use of horribly simplistic and flawed data.

Flawed and relatively useless data is not excusable because it is convenient.

As to inclusion in such a study, the first focus should be on (global gross) revenue. Only C-corps should included as well. Corporate tax rates are non-applicable to all but C-corps, therefore it is misleading to include them in any analysis of corporate tax rates.

Fern

 

[fskimospy]

To get a clear accurate picture will be hellishly complicated, however that in no way justifies the use of horribly simplistic and flawed data.

Flawed and relatively useless data is not excusable because it is convenient.

As to inclusion in such a study, the first focus should be on (global gross) revenue. Only C-corps should included as well. Corporate tax rates are non-applicable to all but C-corps, therefore it is misleading to include them in any analysis of corporate tax rates.

Fern

The data isn't flawed, you've shown no reason for why the US is more or less heterogeneous than other states it is being compared against, etc, etc. You came up with some unfeasible ways in which to improve the data and then are trying to throw it out when that doesn't happen. Sorry, that's not how it works.

 

[Fern]

The data isn't flawed, you've shown no reason for why the US is more or less heterogeneous than other states it is being compared against, etc, etc. You came up with some unfeasible ways in which to improve the data and then are trying to throw it out when that doesn't happen. Sorry, that's not how it works.

The question isn't about the US being "more or less heterogeneous than other states"; it's about high rates and their impact.

Look what you've stated above:

Your data isn't saying what you think it does. Once again you are just stating base rates, which no company actually pays. The effective rate of taxation on US corporations is vastly lower than the 39% your article is referencing.
-snip-
[/url]

I don't know where, or why, the 39% rate is stated to be an effective rate of tax, the most it could be is 35%.

The highest bracket of 39% does exist, but it is only briefly there and designed to eliminate the the benefit of the initial lower brackets, as is the 38% bracket. So, the system is designed to result in an effective rate of 35% for large profitable companies. Se the brackets below. IIRC, it takes a taxable net of income of approx $18M to arrive at an effective (and marginal) rate of 35%.

So, throwing smaller companies into the average is misleading, of course it will drag the average down. Then, seeing this lower average you proclaim that our high tax rates really don't exist. That's absurd. But I agree that under some (or even many) circumstances, even large profitable companies won't pay it; E.g., GE. Even more widespread is the Production Activity Deduction, that was recently created for manufacturers (loosely defined) to help with employment. But as to the latter, most of us don't believe it'll be here long and I doubt anyone considering doing biz in the USA plans on it being around LT.

Here are our corporate income tax brackets: http://www.smbiz.com/sbrl001.html

Fern

 

[Darwin333]

Corporate Tax Rates are really the only Tax Rates that should be Cut. Personal Income Tax on the higher end is where there should be no Tax Cuts and even Increases. At this time anyway, until the Deficit can be eliminated.

Do you honestly think that we can eliminate the deficit by raising taxes only on the higher end of personal income?

 

[fskimospy]

The question isn't about the US being "more or less heterogeneous than other states"; it's about high rates and their impact.

Look what you've stated above:



I don't know where, or why, the 39% rate is stated to be an effective rate of tax, the most it could be is 35%.

The highest bracket of 39% does exist, but it is only briefly there and designed to eliminate the the benefit of the initial lower brackets, as is the 38% bracket. So, the system is designed to result in an effective rate of 35% for large profitable companies. Se the brackets below. IIRC, it takes a taxable net of income of approx $18M to arrive at an effective (and marginal) rate of 35%.

So, throwing smaller companies into the average is misleading, of course it will drag the average down. Then, seeing this lower average you proclaim that our high tax rates really don't exist. That's absurd. But I agree that under some (or even many) circumstances, even large profitable companies won't pay it; E.g., GE. Even more widespread is the Production Activity Deduction, that was recently created for manufacturers (loosely defined) to help with employment. But as to the latter, most of us don't believe it'll be here long and I doubt anyone considering doing biz in the USA plans on it being around LT.

Here are our corporate income tax brackets: http://www.smbiz.com/sbrl001.html

Fern

It's exactly about the US being more or less heterogeneous than those we are comparing it with. In fact, that's literally the only question that matters in this discussion. If all states have the same proportion of high paying and low paying companies, then whether or not you include those lower paying companies is irrelevant when comparing states. You have a problem with it 'dragging down the average'. In order to make your complaint valid, you must provide evidence that such a change drags down the average more in some places than others.

39% is a combination of state and federal tax levels. I don't even know why you're talking about this however, as it isn't germane to the topic under discussion, which is the difference between states. EDIT: States meaning countries.

 

[sandorski]

Do you honestly think that we can eliminate the deficit by raising taxes only on the higher end of personal income?

No, but it can't be done from Spending Cuts either.