As strong and vocal advocates for comprehensive tax reform that includes lower corporate tax rates and a modern, territorial tax system, manufacturers applaud the Alliance for Competitive Taxation (ACT) for busting some often repeated “myths” about corporate taxes. The ACT’s Tax Facts—released today—corrects the record on some of the misconceptions, misstatements and outright falsehoods that the NAM has been pushing back against for years. Here are some of our favorites:
- Corporations have more than $2 trillion in untaxed profits sitting overseas: In reality, this money has been taxed. As the ACT explains, income earned overseas by U.S. companies is subject to a tax in the country where it is earned. The United States is the only country in the G-7 that imposes an additional tax on these profits when the money comes back home, thus encouraging companies to leave foreign earnings overseas.
- The largest U.S. companies don’t pay taxes: The source for this statement, according to the ACT, is a study that looks at corporate tax payments from 2008 to 2012. This time span includes a historic economic recession when many companies lost money as well as bipartisan efforts to spur investment that included incentives that temporarily deferred corporate tax payments. Even under those circumstances, corporations in the United States paid some $1 trillion in federal taxes during that period.
- Increasing the corporate tax rate would benefit American workers: The ACT points out that the burden of the corporate tax is not borne by corporations but by workers (through lower wages), consumers (through higher prices) and savers (through a lower return on savings). We wholeheartedly agree with the ACT that “[C]orporate tax increases are the most economically damaging way to raise revenue, as they reduce economic growth, reduce jobs, depress wages and hurt all American families.”
The NAM is committed to our goal of achieving a comprehensive overhaul of the U.S. tax code that includes lower corporate tax rates and a modern, territorial international tax system as well as a permanent, strong R&D incentive, permanent lower rates for small businesses and a robust capital cost-recovery system. The ACT sets the record straight on some of the hackneyed myths that opponents of pro-growth tax reform have been repeating for years.