Talk:Corporate tax in the United States

Proposed modifications

I propose the following:

• Delete "Criticism" section: the few parts of this that are not entirely political statements are discussions of economic theory where there is no clear concensus. I don't believe Wikipedia articles should be a forum for discussing personal views.
• Expand the introduction and add a "basic principles" section
• Split tax base and rates into two sections: taxable income and tax rates. Enhance the former.
• Add a section on corporate events (formation, reorganization, liquidation)
• Revise discussion of dual level of tax, adding a section for taxation of shareholders
• Get rid of POV that appears in several spots
• Add discussion of deduction limitations, consolidated returns, AMT, state taxes, and tax returns
• Correct graph with effective tax rates, effective tax rate of Germany is around 30% not 7.2%
• The list of tax rates by country show Japan as having the highest corporate rate (http://en.wikipedia.org/wiki/List_of_countries_by_tax_rates), but this page says that the US has the highest rate. — Preceding unsigned comment added by 173.14.255.109 (talk) 05:13, 14 March 2013 (UTC)

Please post suggestions here. I'll check before making above changes.Oldtaxguy (talk) 15:57, 13 April 2010 (UTC) Revised Oldtaxguy (talk) 23:25, 26 April 2010 (UTC)

Draft introduction for comments

Corporate tax is imposed in the United States at the Federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. State and local taxes and rules vary by jurisdiction, though many are based on Federal concepts and definitions. Entity classification as a corporation for tax purposes may be either required for certain corporations treated, per se, as corporations or at the election of other entities. Some types of corporations (S corporations, mutual funds, etc.) are not taxed at the corporate level, and their shareholders are taxed on the corporation's income as it is recognized.

Corporate income tax is based on taxable income as defined within the jurisdiction. Generally, taxable income for a corporation is gross income (business and possibly non-business receipts less cost of goods sold) less allowable tax deductions. Certain income is subject to a tax exemption.

Federal corporate income tax is imposed at graduated rates. The lower rate brackets are phased out at higher rates of income, with all income subject to tax at 34% or 35% where taxable income exceeds $335,000. In addition, tax rates imposed below the federal level vary widely by jurisdiction, from under 1% to over 16%. State and local income taxes are allowed as tax deductions in computing Federal taxable income.

An alternative tax is imposed at the Federal level and by a few states. States and localities generally compute income subject to tax based on formulary apportionment of total taxable income. Also, tax deductions for interest and certain other expenses paid to related party are subject to limitations.

Certain corporate events do not give rise to taxable income. Such events include many of those related to formation, capitalization or merger of the entity, as well as some events related to acquisitions and liquidations.

Consolidated returns are permitted at the Federal level and by certain states. Members of a controlled group or unitary group are allowed to file a single return reporting their combined taxable incomes. Where related parties do not file a consolidated return in a jurisdiction, they are subject to transfer pricing rules. Under these rules, tax authorities may adjust prices charged between related parties.

Shareholders of corporations are taxed separately upon the distribution of corporate earnings and profits as a dividend. Tax rates on dividends are presently lower for both corporate and individual shareholders. To insure that shareholders pay tax on dividends, two withholding tax provisions may apply: withholding tax on foreign shareholders, and “backup withholding” on domestic shareholders. In addition, foreign corporations operating in the U.S. may be subject to a branch profits tax at rates equivalent to dividend withholding tax. Tax on shareholders and branch profits tax may be reduced under tax treaties.

Corporations must file tax returns in all U.S. jurisdictions imposing an income tax. Such returns are under a self assessment concept. Corporate income tax is payable in advance installments, or estimated payments, at the Federal level and for many states. The Federal payments are due the 15th day of the fourth, sixth, ninth, and twelfth months of the tax year. A corporation's tax year may differ from its financial reporting year.

Corporations, like other entities, may be subject to withholding tax obligations upon making certain varieties of payments to others, including wages and distributions treated as dividends. These obligations are generally not the tax of the corporation, but the system may impose penalties on the corporation or its officers or employees for failing to withhold and pay over such taxes. Corporations are also subject to a variety of other taxes, including taxes on capital or stock, excise taxes, property taxes, sales and use taxes, etc., not discussed in this article.

Draft basic principles for comments

citations still pending

Corporate income tax is imposed at the Federal level and by 47 states and the District of Columbia. Certain localities also impose corporate income tax.

Corporate income tax is imposed on all domestic corporations and on foreign corporations having income or activities within the jurisdiction. For Federal purposes, an entity treated as a corporation and organized under the laws of any state is a domestic corporation. For state purposes, entities organized in that state are treated as domestic, and entities organized outside that state are treated as foreign. To be subject to state tax, a foreign corporation must have a certain level of contact or "nexus" with the state.

Domestic corporations are taxed on their worldwide income at the Federal state levels. Foreign corporations are taxed at the Federal level on certain types of income from U.S. sources (including dividends, interest, rents, and royalties), and on income effectively connected with the conduct of a trade or business in the U.S. Tax treaties may reduce or eliminate Federal tax on certain income of foreign corporations. Most states tax foreign corporations on taxable income derived from business activities apportioned to the state on a formulary basis. Note that tax treaties do not apply to state taxes.

Federal corporate income tax is imposed at the same rate on all types of income of a taxable corporation. However, some types of corporations, such as S corporations, mutual funds (Regulated Investment Companies), and Real Estate Investment Trusts, are treated similarly to partnerships. Partnerships are not subject to most income taxes directly; rather, the members of the partnership are taxed on their respective shares of income.

Determinations of what is taxable and at what rate are made at the Federal level based on U.S. tax law. Many but not all states incorporate Federal law principles in their tax laws to some extent. Some states tax business income differently than nonbusiness income of a corporation.

Corporations may choose their tax year. Generally, a tax year must be 12 months or 52/53 weeks long. The tax year need not conform to the financial reporting year, and need not coincide with the calendar year. Corporations may change their tax year with Internal Revenue Service consent. Most state income taxes are determined on the same tax year as the Federal tax year.

References

Revision posted - see above

After a 2 week comment period on the above, I have posted significant enhancements to the article. Oldtaxguy (talk) 19:35, 10 May 2010 (UTC)

Proposal to undo inaccurate changes to introduction

To DMahalko, I disagree with your changes:

• Few states have an AMT, but several have alternative tax bases (e.g., New York has an alternative corporate tax based on subsidiary capital, NJ has an alternative minimum assessment based on gross margin or gross revenue, etc.). Thus, using AMT in referring to the states is incorrect.
• The original version of AMT was an alternative tax on certain tax preferences, and had nothing to do with income levels (other than not kicking in until a certain point). That evolved over the years to the present 1986 act AMT, and inflation and rate creep did a job on that. A statement that the goal was to make high income taxpayers pay tax does not match the legislative history.

I will wait (until mid-week) for rationale for your changes, and if none is forthcoming, will undo your changes .Oldtaxguy (talk) 04:50, 3 July 2010 (UTC)

Deletion of unreliable material, unsupported in primary source

I have deleted the statement "Through various tax breaks specific to the petroleum industry, capital expenses of petroleum companies, including the costs of oil field leases and drilling equipment, are taxed at an effective rate of nine percent, lower than the rate of virtually any other industry.ref New York Times, 2010 July 3, 'As Oil Industry Fights a Tax, It Reaps Subsidies,' http://www.nytimes.com/2010/07/04/business/04bptax.html?_r=1 ". The NY Times article's similar statement, a minor point in the article, is not supported by the Congressional Budget Office study it quotes. The relevant portion of the NYT article stated, "According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry."

The study in question was a 2005 CBO paper analyzing the impact of the U.S. tax system on "capital income" as opposed to "labor income" as a means of exploring alternatives to an income tax, such as value added taxes. The analysis is based on a theoretical construct of an "effective tax rate". The 9 percent quoted by NYT is from Table 1 in the paper which compares calculated "effective tax rates" for theoretical income from various types of assets. The table states a rate of 9.2% for "Petroleum and natural gas structures" which includes pipelines. The paper states that the analysis excludes consideration of any intangible capital, such as costs of oil field leases. It is not clear in the paper whether drilling equipment is included in the petroleum category, or if it is in construction (drilling activities are categorized as construction in most economic analyses) or ships (the Deepwater Horizon was a drilling ship). The NYT article quotes its source wrong on a material item, and assumes another material item that may be wrong. It is unreliable.

The following few paragraphs discuss the details of the CBO paper, for those interested. If you're not interested, skip to the part after the formulas describing how "effective tax rate" is determined for the paper.

The CBO paper was not an analysis of taxes actually paid, but rather an economic calculationof "effective tax rates" based on investor-anticipated rates of return. An analysis such as that in the CBO paper, computing aggregates across broad lines of business, must either use completely theoretical models or weight data in some manner. The authors of the paper apparently chose the theoretical approach. The CBO paper states:

Effective tax rates are commonly used as a metric to evaluate the potential distorting effect of taxes on economic activity. The effective tax rate combines statutory tax rates with other features of the tax code into a single tax rate that applies to economic income over the life of an investment. In the context of capital income, the effective tax rate framework is applied to marginal investments; that is, prospective investments that are expected to earn just enough before taxes to pay taxes due and the return that savers anticipate receiving. (footnote 15: This paper generally follows existing conventions in constructing its effective tax rates but expands on those conventions in its treatment of saving incentives. Existing conventions capture major features of the federal tax code and investment environment, but they abstract from many other features, such as the estate tax and international capital movements. See Appendix A for details of the calculation and Appendix B for an analysis of alternative assumptions.) (emphasis added)

"Effective tax rate" as used in the paper has a different meaning than the phrase when used in tax literature or ordinary language. Non-economists would view imposition of any non-zero statutory tax rate as imposing a non-negative effective tax rate. The CBO paper, however, states "the effective tax rate on debt-financed corporate capital income is negative" and explains various reasons therefor. This statement may have economic validity, but for non-economists it is likely misleading, implying that the government is giving a taxpayer cash, which is not the case. The statement further reinforces the view that the effective tax rates on capital used in the paper do not represent actual taxes paid by companies, as the NYT article alleges. One of the CBO paper's conclusions states, "Eliminating individual-level taxes on capital income and allowing businesses to expense new investments would produce an effective tax rate of -15.1 percent because of the continued deductibility of interest by businesses and homeowners. Thus, instead of taxing the return on capital investment, the tax system would, on balance, subsidize it." The paper also states:

The effective tax rates were computed assuming the currently observed mix of debt and equity financing in the corporate sector. ... The effective tax rates were computed under the assumption that the tax rate on dividends matters in proportion to the fraction of after-tax profits that are paid out as dividends (57 percent). Effective tax rates computed under an alternative view, which gives less weight to the dividend tax rate and more to the capital gains tax rate, are presented in Appendix B."

The paper defines "effective tax rate" in its Appendix. In that definition, it determines "real" returns with and without tax, and applies the difference as the "effective tax rate". Footnotes in Appendix A state:

The real return (that is, the return net of inflation) required by investors—r—can be expressed as a weighted average of the real interest rate and the real return on equity. The real interest rate is measured here as the market interest rate less the inflation rate.

r = f • (i – π) + (1 – f) •E

Where:

f is the fraction of the investment financed by debt,

i is the market interest rate,

π is the inflation rate, and

E is the real return on equity.

The real before-tax rate of return covering the costs discussed in the text can be expressed as:

ρ = (r′ + ς )(1 – uz ) ⁄ (1 – u ) – ς

Where:

r′ = f • [i(1 – u ) – π ] + (1 – f ) • E is the corporate discount rate, which reflects the deductibility of interest.

u is the corporate tax rate,

ς is the rate at which the economic value of the asset depreciates, and

z is the present value of tax-depreciation allowances measured as a share of investment.

Other terms are as defined in the previous footnote.

The expression is the cost of paying the investor’s return and recovering capital. The expression adjusts those costs for the value of tax depreciation. Their product divided by gives the profit that must be earned before tax to cover taxes, investor return, and cost recovery. Subtracting limits the profit to just that needed to cover investor return and corporate taxes.

The NY Times in this case is clearly not a reliable source, as it significantly misinterprets the primary source. This points out, rather conclusively, one thing I have argued lately: even sources that are normally reliable in reporting events may be completely unreliable when reporting technical topics. Reporters are human, and will use convenient materials to demonstrate their points. However, they may not fully understand the technical aspects of what they report. I would therefore caution about using the popular press as a source for tax articles. To this end, I deleted the edit citing this NYT article. Oldtaxguy (talk) 01:13, 1 October 2010 (UTC)

Changes to state tax table

I have made several changes to the table of state tax rates. These include:

• Adding a general note and changing the first note (was (a) ) to in-line with the general note, with deletion of redundant material
• Adding footnotes for graduated rates, local taxes, alternative taxes
• Enhancing items on a few states with special regimes

I think the table would be better as two sets of columns, to reduce the length on the page. Should it be moved to the state tax section also? Oldtaxguy (talk) 00:44, 30 November 2010 (UTC)

Wildly inaccurate NY Times article is not reliable

I have reverted a statement supported by an article in today's online NY Times. The few facts cited in the lengthy opinion piece were inaccurate, and used out of context. The statement that corporate income taxes were 30% of the total in the mid-50s is at best misleading: per Federal budget historical tables, the percentage was 30% or more only in 1942-1945 and 1952-1954, war years. Most years it was much lower. Other "facts" in the times article are also demonstrably false. That rather inflamatory article is not a reliable source. Oldtaxguy (talk) 00:02, 26 March 2011 (UTC)

Concise Encyclopedia of Economics is not a reliable source

The website is sponsored by The Liberty Fund, a privately libertarian think tank. I have reverted material cited only to that source. Oldtaxguy (talk) 20:48, 29 April 2011 (UTC)

I am just a bystander, so please don't eat me, however... Does an online site become an unreliable source for wikipedia purposes simply because of its political leanings? I looked up this "libertarian think tank" on Alexa and it seems to be a well-visited site: Alexa Traffic Rank: 62,693 Traffic Rank in US: 16,680 Sites Linking In: 2,210 Ottawahitech (talk) 19:16, 30 April 2011 (UTC)

Your question is well taken. There have been lots of debates on WP over what is a reliable source, many of them focused on sources that are normally reliable like the NY Times. See the article WP:RS. Here's my personal distillation: A source may be reliable if it is scholarly and well cited or if it is a news publication reporting news (as opposed to doing commentary), and it is also verifiable. Publications with no editorial oversight are not considered reliable sources. The Concise Encyclopedia of Economics was first published by Fortune magazine (not a noted scholarly source). The author of the piece in question is not an economist (and claims only to be an author and consultant). The piece has no citations, and openly advocates policy changes; it is clearly an opinion piece. Therefore, I reverted.

Econlib and Liberty Fund may or may not be reliable sources about themselves. There is some controversy on this topic. For examples of think tanks that may not even be reliable about themselves, see those mentioned in articles on Robin Hood tax and Citizens for a Sound Economy, who, among others, seem to want to hide or obscure details about themselves. Oldtaxguy (talk) 20:56, 2 May 2011 (UTC)

It should be noted that all references have bias, so it's not the position of a reference that makes it unreliable. Otherwise we'd all be hashing out the biases of every source. Neutrality is based on how we present the material and provide due weight to opposing viewpoints. Opinions are fine to include so long they're not a tiny minority view and we attribute the opinions (WP:NPOV). There are degrees of reliability and it depends on the material you are trying to insert - bigger claims require better sources. I haven't looked at what was included or reverted so I'm saying this without the knowledge of the material, but being presented in Fortune magazine does give it credit as Fortune is a respected mainstream publication - sources need not be scholarly (see WP:SOURCES). The content may still have failed to have sufficient weight as an opinion though, and the source could still fail other areas, such as having no editorial oversight like Oldtaxguy described. Morphh ^(talk) 18:33, 6 May 2011 (UTC)

The Concise Encyclopedia of Economics (which I've added as a further reading item), has all sorts of very reliable scholars and editors contributing to it. They include Nobel Prize winners, high-level government officials & advisors, chaired university professors, etc. In this case the article is written by a Fortune magazine editor. Editors are encouraged to incorporate that factual, secondary material, from Norton into the article text. When he editorializes, such opinion should be set forth as such (like "in the opinion of ...."). He also lists some further reading items. But throwing out Norton, because some of the Library of Economics and Freedom is libertarian, is akin to throwing out material from the New York Times because it publishes stuff from Paul Krugman, and others. – S. Rich (talk) 17:52, 23 July 2013 (UTC)

Have corporate taxes in the US always been this high?

I was hoping the history section (Corporate_tax_in_the_United_States#History) would have some material on this interesting topic - but it is not there (or anywhere else in the article?) Ottawahitech (talk) 01:52, 22 November 2011 (UTC)

Corporate tax rates in the USA are at nearly their lowest level since the 1920s. When I started working in tax, in the late 70s, the Federal corporate rate was 48%, and several states had rates above 10%. In years before 1976 there was a regular tax and a surtax (together 48%). The rate was lowered to 34% in 1987, and increased to 35% in 1993. For many years, the USA had the lowest corporate tax rates in the developed non-communist world. I'm opposed to historical tax rate tables. They can be lengthy and add little value. Oldtaxguy (talk) 04:38, 22 November 2011 (UTC)

• The information you provided is extremely interesting to someone like me who knows very little about the topic. However, in order to incorporate it into the article there should be some supporting evidence somewhere? Ottawahitech (talk) 23:22, 22 November 2011 (UTC)

Misleading statistics and chart

I will shortly revert the addition of a graphic purporting to represent effective Federal tax rates by selected industries for 2009. The chart is based on a NY Times article of Jan. 27, 2011, based in part on Dr. Damodaran's data. The IRS statistics on income for corporations by industry are not available for 2009 as of this post (May 2012), 16 months after the Times article.

Dr. Damodaran's data and the NY Times article claim the data are based on an analysis of 7,000 public company public filings. There is no claim regarding anything other than public companies. Thus, the effective tax rate of the other 1.8 million active C corporations is not presented. (Note: there are also about 3.8 million are S corporations that are not directly taxable.)

U.S. accounting rules and SEC rules require businesses to disclose their Federal tax rates (or information that could allow a reader to calculate such). However, the rate disclosed is often the combined effect of current and deferred tax. The rules require separate disclosure of current and deferred tax totals, but not separately for the Federal, state and foreign components. Thus, an analysis of SEC filings cannot provide even a good estimate of current Federal tax for many companies.

By law, only a taxpayer is allowed to disclose tax return data (except for tax exempt organizations). IRS statistics on income are the ONLY reliable data on Federal tax for any year. Certain U.S. government organizations may and do have IRS calculate statistics of a particular nature, and may release such statistics before the IRS publishes it. However, no statistics can be available until after substantially all tax returns for a period are filed. The Times article and Dr. D's data both predate the filing of a significant portion of tax returns for 2009. Thus, no reliable 2009 data could have been available in January, 2011.

Thus, the chart, and the data file on which it is based, must of necessity not represent actual corporate taxes for 2009. The presentation of the chart, with its caption purporting to be representative of actual taxes, is at best inaccurate and misleading. I will revert. Oldtaxguy (talk) 21:42, 7 May 2012 (UTC)

Based on your suggestion the title of the graph was changed and the wording of the description caption updated. If you feel the wording needs to be changed further let me know. Below, are direct responses to your individual objections.

Dr. Damodaran's data and the NY Times article claim the data are based on an analysis of 7,000 public company public filings. There is no claim regarding anything other than public companies. Thus, the effective tax rate of the other 1.8 million active C corporations is not presented. (Note: there are also about 3.8 million are S corporations that are not directly taxable.)

In order to take into account that the data set is limited and does not cover all corporations, the actual "7,000 public company's filings" statement has been included in the description caption.

U.S. accounting rules and SEC rules require businesses to disclose their Federal tax rates (or information that could allow a reader to calculate such). However, the rate disclosed is often the combined effect of current and deferred tax. The rules require separate disclosure of current and deferred tax totals, but not separately for the Federal, state and foreign components. Thus, an analysis of SEC filings cannot provide even a good estimate of current Federal tax for many companies.

To take account of this objection the word federal was removed from the description caption. The wording the "total corporate tax" could be included to cover "federal, state, and foreign components" qualifier. Whether, "an analysis of SEC filings [can] provide even a good estimate of current Federal tax for many companies" is not for wikipedia editors to decide. Prof. Damodaran is a finance professor at New York University and is a reliable source. The New York Times economics staff writers are also reliable sources at reporting Prof. Demodaran's findings. We can discuss the issue further so all your objections can be addressed, however, we might need to go to the Reliable Source Noticeboard to get a second opinion.

By law, only a taxpayer is allowed to disclose tax return data (except for tax exempt organizations). IRS statistics on income are the ONLY reliable data on Federal tax for any year. Certain U.S. government organizations may and do have IRS calculate statistics of a particular nature, and may release such statistics before the IRS publishes it. However, no statistics can be available until after substantially all tax returns for a period are filed. The Times article and Dr. D's data both predate the filing of a significant portion of tax returns for 2009. Thus, no reliable 2009 data could have been available in January, 2011.

To address this objection the statement based on "7,000 public company's filings" was included. If you feel it would be better the word SEC or Securities Exchange Commission could also be included in front of filings. Also, it should be noted that SEC like the IRS is federal government agency and is a reliable source for financial information on companies.

If you feel that the graphs description needs further correction let me know, so we can work on improving it. Guest2625 (talk) 06:01, 8 May 2012 (UTC)

Slight description modifications to misleading information do not make it non-misleading. As I pointed out above, the graph is inherently misleading. It is NOT based on actual U.S. taxes. This article is about corporate tax in the USA, not worldwide tax, and I believe the data in the table/graph are for worldwide effective tax rates. The Times article text supports this view. (Note that the Times article was part of a series of articles lobbying for elimination of deferral of foreign earnings, and thus would be expected to use worldwide rates.) Worldwide effective tax rates incorporate the effects of deferral of indefinitely invested foreign earnings under U.S. GAAP APB 23 (now 740-30-25 (viewable with free subscription). Similar or greater deferral is allowed in substantially all jurisdictions, and under IFRS.

The IRS statistics I cited do not present book (GAAP) income, so they cannot reliably indicate a U.S. tax rate for corporations computed comparably to the table. The data used, based on timing of the article, could not have been peer reviewed, and are from a single source (Dr. P), who does not represent that he is an expert in the field. Finally, the differences between GAAP and tax and the multinational nature of many of the companies' filing with the SEC involve complex issues which the table attempts to present simplistically. Thus, even with enhanced description, the appearance of the chart in this article and the nature of the data will inherently mislead most users. I have deleted the table. If you believe the table should stay, please present a more convincing case, or we can ask for arbitration. Oldtaxguy (talk) 23:43, 9 May 2012 (UTC)

Since, there are other editors who are interested in this graph. I figure we should go through the process of determining whether it should stay or go. I personally feel it is an informative graph based on a reliable source and should stay. There appear to be three objections you have to the graph that we'll need to resolve to reach consensus:

1. The graph is not clearly labeled as effective worldwide corporate tax rates.

I completely agree that the data is for effective worldwide tax rates and will relabel the graph with the word 'worldwide' to make this point completely clear.

2. This article is about United States corporate tax rates and therefore should not contain effective worldwide corporate tax rates.

I disagree with this point. Worldwide effective corporate tax rates are very relevant in understanding United States corporate taxes. The rate of taxes that companies such as Apple pay in the United States or other patent intense companies is completely determined by their ability to shift profits abroad to foreign subsidiaries. The graph helps to understand this issue and how different industries are able to differently use this foreign tax shifting practice. People who read the article on Apple's tax practice recently would have found such a graph useful. The problem is not that the graph is in the wikipedia article but rather that the graph was not placed in the correct section of the article. The graph should have been placed in the "Tax Deferral" section were worldwide taxation and foreign profit tax deferral is discussed.

3. The source is not reliable.

I disagree with this opinion. there are two economic's writers at the New York Times who reference this set of data and a different economic's writer at the Washington Post that mentions this data in his article [1][2][3][4]. You are basically stating that these three economic's journalists from two highly respected newspapers do not know what they are writing about. Next you also question the credentials of the original source the Finance Professor Aswath Damodaran from New York University. You basically state that he is not qualified to read a financial statement and take the total taxes paid and divide that by total taxable income and create a spreadsheet of this data. If you question the reliability of the data then the issue will need to be addressed at the reliable sources noticeboard. You as an individual wikipedia editor will not be able to state that all four of these people are incorrect and will need to gain consensus from other editors that these journalists and professor from NYU are incorrect.Guest2625 (talk) 06:46, 10 May 2012 (UTC)

See above. The below data can be used to create a separate useful graph of effective federal corporate tax rates. I feel that the New York Times article and the finance professor from NYU are reliable sources for information that is relevant to this article; however, to compromise I have searched for more specific data that can address your various concerns about reliability and specificity. The following report was done by the Department or Treasury, Office of Tax Analysis in 2012 http://www.treasury.gov/resource-center/tax-policy/Documents/The-Presidents-Framework-for-Business-Tax-Reform-02-22-2012.pdf . On page 5 there is a table that shows "Table 2: Effective actual federal corporate tax rates by industry for 2007 - 2008". The table should address your concerns and that of any other concerned editor. I'll convert the table to a graph and replace the previous graph with the new US government graph. Guest2625 (talk) 01:33, 10 May 2012 (UTC)

• Guest2625, Just wondering why you crossed out your offer to convert the table to a graph? Ottawahitech (talk) 15:19, 12 May 2012 (UTC)

Comments from a newcomer to this disagreement

• Can someone please explain what graph this discussion is about? Is it the one titled: "Corporate income tax as a share of GDP, 1946-2009"? Ottawahitech (talk) 02:14, 10 May 2012 (UTC)

• 

  The effective worldwide corporate tax rates for different industry sectors based on the SEC filings of 5,928 public companies listed in the U.S. excludes private companies. The effective tax rate equals total taxes paid (state, federal and foreign) divided by taxable income.

  Sure. Here's the graph with its description caption. Also, see the graph's file for more source information. It would be good to hear from some other editors what they think of the graph. Guest2625 (talk) 02:37, 10 May 2012 (UTC)

• Thanks for the speedy response.

My first reaction (I am no expert on this topic) is that this seems like a very interesting and useful graph.

However, I scanned (very briefly) what Oldtaxguy said and it seems he believes (and he is the expert here, I think) that the nytimes article is misleading. If so, this is an interesting situation where a Reliable Source is deemed unreliable. I would be interested in seeing how this conflict is resolved. Ottawahitech (talk) 02:56, 10 May 2012 (UTC)

Just in case anypone else joins this discussion, I believe the Nytimes article is this: http://economix.blogs.nytimes.com/2011/01/27/corporate-taxes-more-winners-and-losers/ Ottawahitech (talk) 03:03, 10 May 2012 (UTC)

Smoking gun

The chart is incorrect in every material respect when presented in the context of corporate tax. The data in the chart " was never meant for public policy debates," and such use by the NY Times was criticized by the the attributed source, Dr. D. The chart was based on a spreadsheet of aggregates and agrees with the effective tax rate column in the company data downloaded by Dr. D from a data service.

The company data includes 7,036 businesses, with an average effective tax rate on the full set of 14%, as per the chart. Of these, 3,897 are assigned a 0.00% effective tax rate. Many of these zero rate companies had positive income tax provisions and positive current tax provisions, according to financial statements I had previously read. Thus, the 14% overall effective tax rate (ETR) clearly did not reflect rates disclosed in financial statements. The 0.00% rate used by Dr. D. must have been adjusted for something not in the data. I noted that some of the zero rate entities were partnerships. Thus, the 14% rate wasn't even a corporate tax rate.

It gets worse. To try to see what was off, I picked a small industry (railroads) and read financial statements. [Almost half of the railroad companies] in the data either were not railroads (misclassified) or were foreign, so I picked another small industry (coal). I compiled my readings in [this data on 23 companies]. The source data for the chart includes 21 companies. Only 14 of the 21 companies should have been included in a comparison of corporate tax rates for the coal industry among SEC filers in the USA. Of the included companies, 3 were partnerships, 2 were not coal companies, and 2 companies were counted twice. The second countings were included as a zero rate, which would further distort the average.

It gets even worse. The effective tax rates for the companies in the data bore no resemblance to information in the SEC filed financial statements for ANY of the coal companies. How were effective rates computed? What adjustments were made? In the data, there were about 150 companies assigned a 60.00% effective tax rate, with none at a higher rate. Was this a cap? None of these questions are addressed in anything accompanying the chart or the articles. Also, there were numerous partnerships, about 150 REITs, and a very hard to determine number of mutual funds, none of which are taxable. Their inclusion distorts any corporate rate calculation, but would be valid for many financial performance measures.

The Treasury/White House study cited above and struck through presents much different results than the chart, casting further doubt on the chart's validity.

Using the chart based on this data to present effective tax rates by industry is at best very misleading. No amount of wording changes to the description can make false information nonmisleading. The data clearly do not show effective tax rates under any normal use of the term. They do not reflect financial statement data, and by law could not reflect tax return data.

There are even further problems with the chart, as pointed out above. The chart and data do not include data on 1.8 million non-public companies, which likely would materially change average tax rate results. The chart was published in an opinion piece by a journalist writing about politics, and advocated a position. The purportedly validating articles were all the same day, and either by the same writer or on a blog by an author who [describes the blog] as "an opinionated blog on economic policy, collapsing banks, cap and trade, health care reform and pretty much anything else you can attach a chart to. His blog points to the hottest policy ideas on the Web and provides his own up-to-the-minute take." Blogs are not reliable sources, neither are opinion pieces. "Editorial commentary, analysis and opinion pieces are reliable for attributed statements as to the opinion of the author, but are rarely reliable for statements of fact."

BTW, I did not and do not state that there is something wrong with Dr. D's data or that he is not an expert in his fields of corporate valuation and finance. The ETR is but one ratio among over 30 calculated and presented in his full range of datasets. Dr. D stated that his data was computed for use in valuation, and the use by the Times as inappropriate. I do state that the NY Times chart and the interpretation of the data are clearly, demonstrably in error, and therefore the chart is not a reliable source. WP policy does NOT require disseminating false information just because a usually reliable source said it. I will delete the chart. Oldtaxguy (talk) 15:19, 12 May 2012 (UTC)

No Smoking gun

Thank you for finding the original full company data set for the sector data. You raise some good points about the data, however, I'm not convinced by your argument. I'll try to address some of the issues you've raised in your different paragraphs.

The chart is incorrect in every material respect when presented in the context of corporate tax. The data in the chart " was never meant for public policy debates," and such use by the NY Times was criticized by the the attributed source, Dr. D. The chart was based on a spreadsheet of aggregates and agrees with the effective tax rate column in the company data downloaded by Dr. D from a data service.

It doesn't matter if the data was meant for public policy debates or not. If the data is valid an economics journalist can use it to give an analysis of company tax rates and make a chart that displays the information which he is discussing. The professor's spreadsheet is merely an aggregated collection of information from thousands of annual company reports, and a journalist or any wikipedia editor can use information inside an annual report as a reliable source. So, if the spreadsheet contains valid data, which it does, then the information can be used as a reliable source.

The company data includes 7,036 businesses, with an average effective tax rate on the full set of 14%, as per the chart. Of these, 3,897 are assigned a 0.00% effective tax rate. Many of these zero rate companies had positive income tax provisions and positive current tax provisions, according to financial statements I had previously read. Thus, the 14% overall effective tax rate (ETR) clearly did not reflect rates disclosed in financial statements. The 0.00% rate used by Dr. D. must have been adjusted for something not in the data. I noted that some of the zero rate entities were partnerships. Thus, the 14% rate wasn't even a corporate tax rate.

"Many of these zero rate companies had positive income tax provisions and positive current tax provisions, according to financial statements I had previously read."

Unfortunately, you have given me no external sources to confirm your statement that many of these companies in fact had earnings and tax payments. You might be correct, but other wikipedia editors need to be able to confirm your statements, if you're going to disprove the information from a reliable source that is the professor from NYU you should give specific references to other reliable sources.

It gets worse. To try to see what was off, I picked a small industry (railroads) and read financial statements. [Almost half of the railroad companies] in the data either were not railroads (misclassified) or were foreign, so I picked another small industry (coal). I compiled my readings in [this data on 23 companies]. The source data for the chart includes 21 companies. Only 14 of the 21 companies should have been included in a comparison of corporate tax rates for the coal industry among SEC filers in the USA. Of the included companies, 3 were partnerships, 2 were not coal companies, and 2 companies were counted twice. The second countings were included as a zero rate, which would further distort the average.

Here you did great analysis of the data set which pushed me to crosscheck the information. I also appreciated it that you placed your spreadsheet information on the commons to easily read and follow. I didn't have time to crosscheck all the the companies and data that you put on the commons, however, I did check a couple of them. I believe I found the reason why your data doesn't match up with the professor's data. I specifically focused on your railroad sector spreadsheet and looked at your data for Kansans City Southern. Looking at the the 2009 annual report for the company on page 30 you see a comparison of 2009 and 2008 financial results. The error in your spreadsheet is that you took the 2009 financial result rather then the 2008 financial result. If you look at the professor's spreadsheet, the second to last column gives you the year that the information is for. In this case the financial results are for 2008. With this in mind, a crosscheck of the professor's data is confirmed. If you find any disagreement in the professor's data and annual reports let me know, because I'm considering the professor's spreadsheet at the moment a completely reliable source.

With the realization that the wrong year was used in your analysis, many of the arguments you have against the data fall away. It would be useful for building consensus if you could state your objections in brief bullet points. At the moment it appears that your main argument is that the New York Times and the Washington Post are not reliable sources because the source is originally from the specialized economix section of the New York Times. This issue obviously can be addressed and I'm sure other wikipedia editors will be willing to contribute their opinion.

At the moment you haven't convinced me that the "NY Times chart and the interpretation of the data are clearly, demonstrably in error, and therefore the chart is not a reliable source."; however, I'll hold off on adding the chart back so that you can respond with a concise list of objections. And once again, thanks for finding the full data set, it's got a lot of useful information in it. Guest2625 (talk) 05:26, 13 May 2012 (UTC)

How foolish of me to believe the first sentence of the Times article in any respect. The article points to 2009. The summary data file, on which the chart is based, is named 09, but there is no text in either file or the list of data explicitly saying it is 2009. The complete dataset, however, uses years from 2006 through 2009, intermingled. Since 2006 was a prosperity year and 2009 a recession year, the data is very non-comparable. Thus, while the dataset may be valuable tidbits about about the particular companies for particular years, they cannot be used to show any pattern for the same year. Looks like yet one more way in which the chart and article are incorrect. Can we finally consider this closed? Oldtaxguy (talk) 03:53, 14 May 2012 (UTC)

The SEC data set is fine and can be used for possible future graphs, but the spread between the simple average versus aggregate average of a sector does raise the question of which average is more relevant. The New York Times appears to have thought that the simple average was a useful measure of tax rates for the different sectors. I'm on the fence about the issue and will have to think about it maybe some other editors will have an opinion. As to the different years of some of the data the non 2008 years can easily be filtered out for the sectors graphed and the total average bar of 14.1% can be removed from the graph. Guest2625 (talk) 10:39, 15 May 2012 (UTC)

Too much of the data is from different years for any aggregates or averages to be meaningful. Approx. distribution of data by year:

1970: 700

2006: 200

2007: 500

2008: 4,500

2009: 1,100

You're going to salvage this how?

4,500 corporate filings in 2008 is a tremendous number of filings. All those filings are reliable sources. I haven't yet careful looked at the different sectors, but there is nothing wrong with using SEC data as the New York Times did for effective tax rates. I'm not in a rush to make the more precise New York Times chart based only on 2008 filings since I have other work at the moment. But to sort and only keep the 2008 filings in the excel spreadsheet is no problem. Guest2625 (talk) 10:47, 17 May 2012 (UTC)

And after you do that you have a judgmentally selected sample of a portion of SEC filers for one year, omitting filers that were updated for other years. That's garbage. Without massive OR, the chart and the data are not salvagable. Oldtaxguy (talk) 22:33, 17 May 2012 (UTC)

References

Table is not of tax benefits but tax expenditures

I have deleted the table. The description disagrees with the source. The JCT listed tax expenditures, which is Congress-speak for things some people might not want to tax and some might. The JCT amounts and estimates are for prior and future years. There are inherent problems with some of the items. The first is something that no other country taxes: unremitted earnings of foreign subsidiaries. The second is something generally considered mandated by the U.S. constitution. There is no way either of these can be called "benefits". The table might be suited to an article on tax policy, but since it is a table partly about things that are NOT in the tax law, it is hardly suitable for an article on the tax law. Oldtaxguy (talk) 03:18, 21 May 2012 (UTC)

That's a good suggestion that JCT numbers for only past years are used rather than estimates for future years. I've replaced the table with numbers for the tax years of 2005-2009. Guest2625 (talk) 08:30, 21 May 2012 (UTC)

That still does not address my biggest objections: some of the items are not "tax benefits", and the table is in the wrong article. On the foreign item, here's a thought question for you: should the shareholders of a corporation be taxed on the income of the corporation before it is distributed as a dividend? The foreign item in the table is the crudely estimated effect of not so taxing corporate shareholders of foreign corporations until the foreign corporation pays a dividend, but does not include any effect of not taxing shareholders of domestic corporations until the earnings are distributed. Note that the Subpart F, PFIC and transfer pricing provisions for the most part prevent U.S. shareholders, including corporations, from artificially deferring income offshore. The purported benefit is granted by every other country, and only in the USA has there even been consideration of doing anything else.

Here's an exemple: Small Corp. owns 60% of HK Ltd, a foreign corporation. HK Ltd makes USD 1 million manufacturing and selling watches, and pays USD 175k Hong Kong tax. HK Ltd does not pay a dividend. Under current law, Small Corp will pay tax on HK Ltd earnings only when HK Ltd pays a dividend. This deferral is what you're calling a benefit. Change the facts a bit. Jim owns 0.001% of Nestle AG, the big Swiss company. Should he pay tax on his share of Nestle earnings now, or when Nestle pays a dividend? If your answer is different for Small Corp. than for Jim, why?

After my June 15 crunch, I'll address these issues more. For now, the table should be deleted. Also, adding graphics and tables to articles is good where they relate to the article and are not misleading, but bad where they are only peripherally related or are misleading. Oldtaxguy (talk) 22:46, 21 May 2012 (UTC)

Below is my response to your different points:

That still does not address my biggest objections: some of the items are not "tax benefits", and the table is in the wrong article.

The first page of the report by the Joint Committee on Taxation would indicate to most wikipedia editors that this material is relevant to this article on corporate taxation in the United States. From the first page:

"My name is Thomas A. Barthold. I am the Chief of Staff of the Joint Committee on Taxation. It is my pleasure this morning to provide a brief overview of the Federal tax system. You asked if I could emphasize the income taxation of individuals and corporations. My written testimony provides additional details and includes an appendix with further information. Members have separately been provided with several charts and tables to which I will refer during my oral testimony."

"The staff of the Joint Committee on Taxation is nonpartisan and serves the entire Congress. The staff of the Joint Committee on Taxation includes experienced professional economists, attorneys, and accountants, who assist Members of the majority and minority parties in both houses of Congress on tax legislation."

Also, most wikipedia editors would agree that a table that describes the size of different corporate credits, deferrals, and deductions that were just discussed in the paragraphs above it would be considered in the correct wikipedia article.

On the foreign item, here's a thought question for you: should the shareholders of a corporation be taxed on the income of the corporation before it is distributed as a dividend? The foreign item in the table is the crudely estimated effect of not so taxing corporate shareholders of foreign corporations until the foreign corporation pays a dividend, but does not include any effect of not taxing shareholders of domestic corporations until the earnings are distributed. Note that the Subpart F, PFIC and transfer pricing provisions for the most part prevent U.S. shareholders, including corporations, from artificially deferring income offshore. The purported benefit is granted by every other country, and only in the USA has there even been consideration of doing anything else.

Should the shareholders of a corporation be taxed on the income of the corporation before it is distributed as a dividend?

I have no opinion as to this question; however, I do trust the experienced professional economists, attorneys, and accountants at the Joint Committee on Taxation that this is a corporate tax expenditure which they label as a tax deferral in the table on page 85. Guest2625 (talk) 09:42, 22 May 2012 (UTC)

• I see this The purported benefit is granted by every other country, and only in the USA... repeated a lot, but this comment applies to all income taxes in the USA, not just corporate ones:

Citizens of the US must file with the IRS whether they reside in or outside the US. Canadians on the other hand, for example, must file with Canada Revenue Agency, only if they reside in Canada or if they derive income from Canada. Americans on the other hand even when they live outside the US all their lives must still file with the IRS every year. Ottawahitech (talk) 19:17, 22 May 2012 (UTC)

"Google slips $3.1bn through 'Double Irish' tax loophole"

Does any of the material in this article fit here: http://www.theregister.co.uk/2010/10/22/google_double_irish_tax_loophole/ ? Ottawahitech (talk) 07:21, 11 July 2012 (UTC)

Please pardon, in advance, my rather rambling discourse that follows.

The popular press article and the one it cites cover use of longstanding corporate tax planning techniques. These techniques were greatly enhanced by passage of 26 USC 954(c)(6) under the Bush administration. That section gutted a key part of Subpart F, which placed some limits on the techniques.

Multinational businesses earn income in many jurisdictions. Some of those jurisdictions impose income taxes at high rates, some at low rates, and some not at all. Multinational business is rarely conducted through a single entity, mainly for legal (limited liability) and regulatory reasons. Where multiple parts of a business group earn income from related businesses, the question arises of how that income should be allocated among the parts. That is where transfer pricing rules come into play. Once the parts are allocated, then each part must determine its own income tax. Those parts operating in low tax countries pay low tax.

By carefully planning where to conduct operations, have risks, incur debt, and have other aspects of one's activities, it is possible to have some part of the taxable activities and income in low tax countries. Ireland, e.g., has a corporate tax rate of 12.5%. Thus, if a corporation earns profits in Ireland, it pays only 12.5% income tax. See the discussion in the section above. Some operations, risks, debt, etc., and the profits therefrom, can often be shifted to zero tax countries.

Under the tax systems of all countries, earnings of a corporation are not taxed to its shareholders until paid to the shareholders as a dividend. As a PNC Bank shareholder, you do not pay tax on PNC Bank's earnings until they pay you a dividend. This applies to corporations who are shareholders of other corporations. Some countries impose a withholding tax on payment of dividends to nonresidents, some do not. Some countries tax shareholders on dividends only from companies in the same country. The USA taxes all shareholders when they receive dividends.

Many countries, but far from all, tax companies on their worldwide income. None, however, impose tax on income of subsidiaries of companies organized outside the country. Under international law, they likely could not do so even if they wanted to. Thus, if a U.S. company has a subsidiary in Ireland, the total income tax is only 12.5% until that Ireland subsidiary pays a dividend.

The U.S. has two aspects of international tax law that limit these effects: transfer pricing rules, and controlled foreign corporation (CFC) rules. The former allow the IRS to adjust prices charged between related parties to reflect the functions, risks, and activities of the parties. Under these rules, a company cannot artificially shift income out of the USA while keeping all the functions and risks in the USA. The CFC rules under Subpart F (26 USC 951-964) limit the ability to shift income out of the USA and also limit the ability of a U.S. group to shift income among its foreign subsidiaries to lower tax jurisdictions. The Subpart F rules cause a U.S. shareholder of a CFC to pay U.S. tax now on certain types of earnings of the CFC, even before the CFC pays a dividend. The changes to Subpart F during the Bush administration, though, greatly expanded the ability to shift income through dividends, interest, and royalties without triggering Subpart F inclusion in U.S. income.

Among the structures that have been used for decades is the following: Locate employees in a low tax jurisdiction (like Ireland) subsidiary. Have an even lower tax jurisdiction subsidiary (like Bermuda) pay for developing intangible assets (like software, patents, etc.). The lowest tax subsidiary receives those customer revenues not subject to withholding taxes and pays the low tax subsidiary for the work. An additional structure can make use of differences in entity characterization to avoid tax on financing income, with each of two jurisdictions' rules effectively relying on the other jurisdiction to impose tax.

There have been proposals to cause all U.S. corporations (magically, somehow) to have to pay tax on the income of their subsidiaries. There have been proposals to eliminate all tax on foreign earnings. None of these have ever been introduced as legislation, so none of the details have ever been ironed out. However, since the proposals exist, the Congressional Budget Office has decided, in its infinite wisdom, to take a guess at what the effects would be and the "cost" (so-called tax expenditures) of not doing it. See the discussion in the section above.

International tax planning is very complex. The popular press does not really have a clue about any of it, so sensationalist stories abound when they find out some tidbit. The Google case is fairly extreme because the nature of Google's business lends itself to offshore income and Google operates in so many countries.

I hope this provides some background and context. Oldtaxguy (talk) 20:20, 11 July 2012 (UTC)

Article rating

I am stunned by the article's rating of start class. I believe the rating in WikiProject:Taxation heading should be B class, but I cannot do this rating as I contributed significantly. Rating by someone knowledgable requested.Oldtaxguy (talk) 20:48, 11 August 2012 (UTC)

I've updated it, but feel free to rate articles as you see fit, with exception to peer review ratings of GA, A, & FA. These lower ratings are determined by the project members for our own use in applying resources to tax articles. Here is the scale if you wish to review it. Morphh ^(talk) 02:58, 12 August 2012 (UTC)

Comparative taxation

I have removed a section comparing results of tax systems. It is not appropriate to an single country article on a specific segment of that country's tax system.Oldtaxguy (talk) 02:42, 20 September 2012 (UTC)

Comparison of Corporate Income Taxes
As a Percentage of GDP
For the US and OECD Countries, 2008

Country	Tax/GDP	Country	Tax/GDP
Norway	12.5	Switzerland	3.3
Australia	5.9	Netherlands	3.2
Luxembourg	5.1	Slovak Rep.	3.1
New Zealand	4.4	Sweden	3.0
Czech Rep.	4.2	France	2.9
South Korea	4.2	Ireland	2.8
Japan	3.9	Spain	2.8
Italy	3.7	Poland	2.7
Portugal	3.6	Hungary	2.6
Britain	3.6	Austria	2.5
Finland	3.5	Greece	2.5
Israel	3.5	Slovenia	2.5
OECD avg.	3.5	Germany	1.9
Denmark	3.4	Iceland	1.9
Belgium	3.3	Turkey	1.8
Canada	3.3	US	1.8

A comparative table is useful for the reader to understand taxes in the United States with respect to other countries. The taxes in one country are better understood when compared to other countries. Also, it should be noted that the table has been collapsed and takes up minimal space. Guest2625 (talk) 17:16, 20 September 2012 (UTC)

Were those the effective rates or the nominal rates? I find the nominal rates to be so misleading as to be unsuitably biased. —Cupco 18:30, 20 September 2012 (UTC)

They were neither nominal or effective rates, but rather corporate taxes as a percentage of GDP. I agree that nominal tax rates are problematic since what tax rates a corporation actually pays can vary greatly depending on the company's exact circumstances. I think the simplest and least biased comparative tax value is simply total taxes/GDP as was done in the first graph in the Taxation in the United States article. Guest2625 (talk) 20:18, 20 September 2012 (UTC)

I see. Instead of as a percentage of GDP you can usually get the ratio of corporate taxes collected to corporate taxes plus after-tax profits, which is exactly the same as the effective corporate tax rate, and won't be perturbed by the relative size of the public sector which has nothing really to do with corporate taxes. —Cupco 20:33, 20 September 2012 (UTC)

It would great to have this sort of effective corporate tax rate for different countries, but I haven't come across such a data set. At the moment, I think the best data available is the OECD data that was similarly used in the taxation in the United States article. Guest2625 (talk) 21:15, 20 September 2012 (UTC)

I think the OECD publishes those data e.g. here. If Oldtaxguy objects to a revised table, I'm sure it would be welcome at Corporate tax with a {{Seealso}} link from here. —Cupco 21:48, 20 September 2012 (UTC)

Corporate tax is indeed a good place for the table. Thanks for the suggestion. I will move the table. Oldtaxguy (talk) 22:57, 20 September 2012 (UTC)

I object to the table being removed from this article. I have clearly stated why this table should be in this article. The table can clearly be in both articles and positively benefit both sets of readers. Having a collapsed comparative table in a country tax article is not controversial, as can clearly been seen by the fact that a similar comparative tax graph of GDP/tax is in the Taxation in the United States article. If there was a problem with such data being in a country specific tax article, then the issue would have been raised by the numerous other wikipedia editors who have seen such Tax/GDP comparative data in the following similar articles: Economy of the Republic of Ireland, Taxation in Australia, Taxation in Canada, Taxation in Sweden, Taxation in Switzerland, and Taxation in the Republic of Ireland. Guest2625 (talk) 00:31, 21 September 2012 (UTC)

Well I don't really have an opinion about whether it should be in this particular article, but I object to calling the corporate tax revenues denominated by GDP a tax "rate" -- the same exact tax rate would be reflected differently in a country where 75% of the economy is the private sector compared to a country where it's 50%. And therefore it is not a proper measure by which to compare corporate tax rates between countries. Were you unable to get the total corporate after-tax profits and the corporate tax totals from the link I provided above? —Cupco 03:12, 21 September 2012 (UTC)

If you can find the exact weblinks for the total corporate after tax profits and corporate tax totals that would be great. With the two datasets a table could made. I also agree with you that the tax/GDP is not meant to be a tax rate. It's simply total corporate taxes / GDP and is used for comparative purposes as per the New York Times article and OECD economists. Guest2625 (talk) 03:05, 22 September 2012 (UTC)

No comparable corporate tax table is in any of the articles cited. The articles cited are articles on overall taxation in the countries, and some (not all) include the same comparative table of overall tax revenue (including Federal, state, and local, income, sales, excise, etc.) to GDP. This article is specific to the U.S. corporate income tax, a very small piece of the overall tax system of the USA. The table may be appropriate to a worldwide corporate tax article, but not to a country specific article on only a portion of the tax system.

In addition, the table appears to contain an incorrect rate (1.8) for USA, based on a NY Times web article (which may be a blog). The OECD database shows the correct rate for the USA at 2.0. See [[5]] Further, 2008 and 2009 were severe recession years and not representative. The same OECD data shows 2008 and 2009 corporate tax collections as well below normal, particularly in the USA.

I have deleted. Oldtaxguy (talk) 23:28, 21 September 2012 (UTC)

Thanks for pointing out the correction in the data set. I'll correct the table and add a reference to the original data set from the OECD. The fact that a recession hit in 2008 and 2009 shouldn't matter for comparative purposes since the recession was global. Also, I was pointing out a clear parallel of how the general taxation articles of different countries contained tax/GDP data, and therefore by extension, it is understandable for the corporate taxation articles of different countries to have similar corporate tax/GDP data. The consensus across the taxation articles is on the side of inclusion of tax/GDP for comparative purposes. Guest2625 (talk) 03:05, 22 September 2012 (UTC)

References

Effective rate graph

What is this about? The graph is hardly OR, per WP:CALC and WP:OI. You get the exact same graph if you go to FRED and ask for corporate taxes divided by the sum of corporate taxes and profits, which is exactly what the Wordpress author said they did, except monthly instead of yearly. This is exactly specific to the U.S. and exactly specific to corporate taxes irrespective of public sector size, unlike the CP/GDP table discussed above. I've replaced it. —Cupco 00:04, 22 September 2012 (UTC)

It looks like the Fed is getting into the speculative data business. The graph appears to purport to represent data through 2011, but actual statistics (from the IRS) have not yet been released. So how did the Fed get its purported data? Note that it is a criminal offense for the IRS to release tax return data in other than statistical form except upon court order or in furtherance of tax treaties. The latest corporation data available is 2008. I have previously criticized the NY Times for using purported data before the date the data could exist (in that case, before returns were even due). This purported data from the Fed is disturbing. Further, it very loosely uses a term "corporate profits" without specifying if it is corporate taxable income or something else. There seems to be either very little understanding or intentional manipulation by the press, and now the Fed, of these tax statistics. Corporations report worldwide income of themselves and all affiliated companies on their financial statements. Is this the number the Fed is using? Many (but far from all) corporations reporting to the SEC report book income by geographic segment in their financial statements. All those organized in the USA report their current and deferred tax provisions split between Federal, state, and foreign, if the pieces are material. Is the Fed using current provision? Again, the level of misunderstanding or manipulation is very disturbing. See discussion above.Oldtaxguy (talk) 00:47, 22 September 2012 (UTC)

The Fed's FCTAX comes from Commerce's BEA/NIPA which appears per [6] to have early access to summaries of IRS forms 1120, 1165, and Schedules C, E and F. —Cupco 03:24, 22 September 2012 (UTC)

It appears you have misread the source you cite. NIPA estimates, the BEA measure, do not use IRS data at all. Rather, they are econometric estimates based on surveys (statistical samples) conducted by BEA. The survey data on consumption and capital is used in making chain-type calculations of quantity and price indices. These indices are then applied to base year benchmarks (again not from IRS data) to arrive at estimated amounts. See the description of updates to the process on pages 1-3 and the formulas used, in Appendix I, page 25. I would also point out that the St. Louis Fed "data" appears to purport to relate to a period for which tax returns had not yet been filed. No amount of "early access" (which doesn't exist) can possibly provided data that does not yet exist. Again, very disturbing. Oldtaxguy (talk) 00:54, 24 September 2012 (UTC)

Original research

The repeated use of US statutes and regulations throughout the article is original research. I've tagged the article as such -- and reassessed the classification of the article as C-class. (Also, I commented on the inclusion of the Concise Encyclopedia above.) – S. Rich (talk) 17:52, 23 July 2013 (UTC)

I've been checking the US statute and regulation citations that were given. They seem to be absolutely solid references. And, I'm not quite sure why using the statutes would be considered original research. Guest2625 (talk) 10:38, 26 February 2014 (UTC)

Without directly responding to the comments of editor Srich32977: Merely using citations to statutes and regulations would not necessarily be considered prohibited "Original Research" as that term is used in Wikipedia. Use of statutes and regulations might constitute use of primary sources, but even the use of such primary sources in and of itself is neither improper nor "Original Research." Many editors do labor under two misconceptions: First, that the mere use of primary sources is "original research," and second, that the mere use of primary sources is prohibited. Again, I haven't reviewed the article immediately prior to posting this comment, so I cannot say that Srich32977 is making any such mistakes. Famspear (talk) 01:12, 22 July 2016 (UTC)

OK, I just did a quick rough count, and I found that a little over half the citations in the article are citations to statutes, etc. In the 75 or so footnotes, I counted about 34 citations to secondary sources. In an article on U.S. Federal income tax law, that wouldn't seem to be out of line, as far as the ratio of primary to secondary sources goes. The general rule is that articles should ordinarily rely mainly on secondary sources, but very statement of that rule leads to its corollary: That sometimes reliance mainly on primary sources is going to be OK (otherwise, the rule would have to be changed to say that we NEVER rely mainly on primary sources).

A part of the basis for the rule for generally relying mainly on secondary sources is that we want to avoid "original research" in the sense of Wikipedia editors grabbing statement A from source A and statement B from source B and then reaching conclusion C, where conclusion C was not a conclusion actually reached by sources A and B. You can have that problem whether you're using mainly primary sources or mainly secondary sources. And, in the occasional situations where you are using mainly primary sources, you may well not have that problem at all.

So, again, the mere reliance mainly on primary sources is not in and of itself a problem. We have to look at everything in the context of the Wikipedia guidelines, etc. Famspear (talk) 01:24, 22 July 2016 (UTC)

To echo some of what Famspear stated, I don't think the US statute itself can be considered OR. Our interpretation of the statute is what could be OR. Since a statute should be a fact piece, not opinion, we should be able to verify that the statute accurately reflects a fact stated in the article. If it is being used to source an opinion, that's a red flag, or if the statement of fact goes beyond what is stated in the source, red flag. But I don't have a problem with using primary sources to the authority to source facts about the tax code. Morphh ^(talk) 14:21, 22 July 2016 (UTC)

Assessment comment

The comment(s) below were originally left at Talk:Corporate tax in the United States/Comments, and are posted here for posterity. Following several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section.

US Corporate Taxes are among the only taxes where it is impossible to determine who is actually paying the tax. The taxes must ultimately be paid by members of three groups; employees, customers, and shareholders. It is likely that the distribution of the tax burden varies widely from corporation to corporation. Any existing research regarding the distribution of corporate tax among these groups would enhance this discussion. This feature of corporate taxation is most probably the underlying reason for its popularity with politicians. Corporate tax is far less visible to the average voter. It is in essence a stealth tax, but a tax that nevertheless is paid by people because, in the end, there is no other place for it to come from. Bob07461 (talk) 17:41, 29 May 2009 (UTC)

Last edited at 17:41, 29 May 2009 (UTC). Substituted at 12:18, 29 April 2016 (UTC)

I have been trying to determine

whether the sentence from the lede

"The United States has the third highest general top marginal corporate income tax rate in the world at 39.1 percent (consisting of the 35% federal rate and a combined state rate), exceeded only by Chad and the United Arab Emirates .[1]"

should be removed or not. Although it is a very popular conservative talking point, I believe that it has very little relationship to reality. Also, if someone could point me to a good definition of "general top marginal corporate income tax rate" I will send them a "Thanks." Anyway, I am considering removing that sentence and will do so in a few days if there is no reply. Einar aka Carptrash (talk) 18:43, 21 July 2016 (UTC)

External links modified

Hello fellow Wikipedians,

I have just modified 4 external links on Corporate tax in the United States. Please take a moment to review my edit. If you have any questions, or need the bot to ignore the links, or the page altogether, please visit this simple FaQ for additional information. I made the following changes:

• Added archive https://web.archive.org/web/20110612145504/http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=a8ec299713ebc0f8eb6cd5d0a6acbc92&rgn=div8&view=text&node=26:18.0.1.1.2.20.69.2&idno=26 to http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26:18.0.1.1.2.20.69.2&idno=26
• Added archive https://web.archive.org/web/20110612162314/http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26:18.0.1.1.2.20.69.4&idno=26 to http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26:18.0.1.1.2.20.69.4&idno=26
• Added archive https://web.archive.org/web/20110501140600/http://www.taxfoundation.org/taxdata/show/230.html to http://www.taxfoundation.org/taxdata/show/230.html
• Added archive https://web.archive.org/web/20120924031542/http://www.levin.senate.gov:80/newsroom/press/release/subcommittee-hearing-to-examine-billions-of-dollars-in-us-tax-avoidance-by-multinational-corporations/?section=alltypes to http://www.levin.senate.gov/newsroom/press/release/subcommittee-hearing-to-examine-billions-of-dollars-in-us-tax-avoidance-by-multinational-corporations/?section=alltypes

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Average effective corporate tax source not accessible

I was checking the source number 2 that support the following last sentence in the article introduction :
"However, the average corporate tax rate in 2011 dipped to 12.1%, its lowest level since before World War I, largely due to the great recession and a bonus depreciation tax break.[2]"

The reference and the link is the following:
""With Tax Break, Corporate Rate Is Lowest in Decades" Wall Street Journal, February 3, 2012 "

Since you need to pay to see the article, I'm not entirely sure whether it remains a valid source, as many people won't be subscribed to the Wall Street Journal, not allowing them to confirm the source. What are your thoughts? Eliijahh (talk) 13:35, 26 April 2017 (UTC)

@User:Eliijahh Here I have found an interesting article about such rates and rebates https://publicintegrity.org/business/taxes/trumps-tax-cuts/you-paid-taxes-these-corporations-didnt/

I have no time to check and update this and related articles though with such data. Zezen (talk) 07:50, 13 June 2019 (UTC)

External links modified

Hello fellow Wikipedians,

I have just modified 7 external links on Corporate tax in the United States. Please take a moment to review my edit. If you have any questions, or need the bot to ignore the links, or the page altogether, please visit this simple FaQ for additional information. I made the following changes:

• Corrected formatting/usage for http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26%3A18.0.1.1.2.20.69.2&idno=26
• Corrected formatting/usage for http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26%3A18.0.1.1.2.20.69.4&idno=26
• Added archive https://web.archive.org/web/20110716122716/http://www.ksrevenue.org/pdf/taxexpreport.pdf to http://www.ksrevenue.org/pdf/taxexpreport.pdf
• Corrected formatting/usage for http://www.levin.senate.gov/newsroom/press/release/subcommittee-hearing-to-examine-billions-of-dollars-in-us-tax-avoidance-by-multinational-corporations/?section=alltypes
• Added archive https://web.archive.org/web/20110612162355/http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26%3A4.0.1.1.1.0.12.110&idno=26 to http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26%3A4.0.1.1.1.0.12.110&idno=26
• Added {{dead link}} tag to http://ecfr.gpoaccess.gov/cgi/t/text/text-idx%26c%3Decfr%26tpl%3D/ecfrbrowse/Title26/26cfrv12_02.tpl
• Added {{dead link}} tag to http://ecfr.gpoaccess.gov/cgi/t/text/text-idx%26c%3Decfr%26tpl%3D/ecfrbrowse/Title26/26cfrv6_02.tpl
• Added archive https://web.archive.org/web/20091122104710/http://www.state.nj.us/treasury/taxation/pdf/other_forms/cbt/09cbt100.pdf to http://www.state.nj.us/treasury/taxation/pdf/other_forms/cbt/09cbt100.pdf
• Added archive https://web.archive.org/web/20130820114017/http://assets.opencrs.com/rpts/R40623_20100903.pdf to http://assets.opencrs.com/rpts/R40623_20100903.pdf

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Cheers.—InternetArchiveBot (Report bug) 08:51, 13 August 2017 (UTC)