High U.S. Tax Rates, but Most Businesses Pay No Tax - How Can That Be?
Posted by: in Your BusinessA couple of current stories about taxes on U.S. businesses have me shaking my head.
On the one hand, the U.S. has the second highest corporate tax rate in the world (at 39.3 %, average of federal and state), with only Japan being higher. And some states, including Iowa, California, Pennsylvania, and New Jersey, pay higher taxes than Japanese businesses. A Wall Street Journal story detailing these figures includes statements about how damaging these tax rates are to U.S. businesses. At the least, these high taxes are dis-incentivzing. Why bother?
On the other hand, many U.S. businesses pay no tax at all. As I reported in my About.com Guide Site (U.S. Business Law and Taxes), two-thirds of U.S. businesses pay no tax. So if the tax burden is such a problem, but most businesses pay no tax, is there really a concern here?
My first reaction is that the high U.S. tax rate is a massive incentive for businesses to find assertive CPA’s who can work the angles to keep their clients’ taxes low or at zero. This whole system doesn’t seem useful or productive, to me. Why not keep the taxes low, and craxk down on the deductions. Or am I missing something?
What do you think?
Tags: , U.S. business taxes
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