Fact Sheet: Corporate Tax Rates

Corporations are paying a smaller share of federal tax revenue than they did in the 1950s, dropping from one-third then to only one-tenth of the total today. Yet, an army of lobbyists is pushing hard to convince Congress to cut the corporate income tax rate by nearly one-third — from the current 35% to 25%. This issue is at the epicenter of the coming battle over tax reform. Conservatives have defined the debate in a highly misleading manner. They focus on the top statutory rate — the rate specified by law — instead of the effective tax rate — what is actually paid. Because U.S. statutory rates are somewhat higher than other OECD countries, corporations claim that this makes them less competitive, and that it stunts job growth. But their argument is unpersuasive when the debate focuses on effective corporate tax rates. The debate has been further skewed by calls for “revenue neutral” corporate tax reform, in which any revenue raised by closing tax loopholes is used to reduce rates. Corporations haven’t contributed a dime towards deficit reduction in recent budget deals. And they want to continue this special treatment while American families shoulder the entire burden. Meanwhile, the country is starved for resources needed to foster economic growth and job creation — from infrastructure to research to improved schools.