Tuesday, December 20, 2011
New York Times, Cutting the Corporate Tax Rate Is No Economic Panacea, by Bruce Bartlett:
First, insofar as taxes affect businesses, more than 90% of businesses are not really affected by the corporate tax. They are sole proprietorships, partnerships or S corporations that are essentially taxed only on the individual tax schedule.
The corporate tax affects only C corporations, legal entities separate and distinct from their owners, the shareholders. The income of C corporations is taxed twice -- once at the corporate level and again when the corporation’s income is paid out to its owners.
Therefore, the tax burden on C corporations is a function of both the corporate tax rate and the personal tax rate on dividends. To be valid, an international comparison of corporate taxes must take both into account.
This table uses data from the Organization for Economic Cooperation and Development:
... [W]hile it may be a good idea to reduce the corporate tax rate as part of a tax reform package, the idea that this will jump-start growth is nonsense.