A recent study from the Institute for Policy Studies seems to assert that businesses with lower tax rates were not job creators. Specifically, they analyzed “92 publicly held U.S. corporations that reported a U.S. profit every year from 2008 through 2015 and paid less than 20 percent of these earnings in federal corporate income tax.” They then assert that those 92 firms lost 1 percent of their workforce in that time frame versus a 6 percent gain for the U.S. private sector as a whole.
The authors use this analysis to suggest that pro-growth tax reform will not produce the positive employment benefits that its advocates, including the NAM, assert. But, this misses the point. You cannot extrapolate the tax burdens of 92 firms to the larger economy, mostly because there are a variety of reasons why those individual firms might have paid lower tax rates in those years, including deductions for losses in prior years.
The important point—missed in this paper—is that American businesses are at a competitive disadvantage globally, with marginal tax rates in the United States higher than any other major economy. We need pro-growth tax reform—an idea that has bipartisan support. Read More