US effective corporate tax rate after deductions is lower than the OECD average. Though by how much is up for debate.

PS: You can debate various points, but it's only 11% of total federal tax revenue.

This is especially true for tech companies, which have R&D tax credits and are able to shift much of their income offshore because their profits are based largely on intangibles (which can be moved by signing some contracts, as opposed to factories or restaurants, which are geographically fixed).

The most authoritative, recent report on the matter by the CBO:

https://www.cbo.gov/sites/default/files/115th-congress-2017-...

It clearly makes the case that the US is non-competitive with other G20 nations on the corporate tax rate. The US average corporate income tax rate for 2012, was 29%. In Canada it was 16%; Brazil 22%; China 19%; UK 10%; Germany 14.5%; Australia 17%; South Korea 20%; France 20%. How much more non-competitive can the US get exactly?

And when it comes to the OECD, the US is once again far from competitive:

"The most recent estimate comes from the World Bank and International Finance Commission, which put the United States’ effective rate for 2014 at 27.9 percent. That’s second-highest behind New Zealand among OECD countries and 15th-highest among the 189 countries measured."

http://www.politifact.com/punditfact/statements/2014/sep/09/...

What is total US corporate profit before taxes per year? And what's 27.9 percent of that.

Or from GAO: http://www.gao.gov/assets/660/654957.pdf

"For tax year 2010 (the most recent information available), profitable U.S. corporations that filed a Schedule M-3 paid U.S. federal income taxes amounting to about 13 percent of the pretax worldwide income that they reported in their financial statements"

https://en.wikipedia.org/wiki/Repatriation_tax_holiday dropped actual tax rate to 5.25% in 2004. Companies are more than happy to wait for the next one.

PS: Also of note a lot of overseas profit is anything as it's easy to pretend US operations only break even by shifting around costs on paper.

Apple's international subsidiaries net tens of billions in profits every year, after paying substantial taxes in their home countries. Those aren't taxable in the US until they are returned to the US. Since Apple would owe over 42% in income taxes to the state of California and the US government if they moved them, they keep them in Ireland instead. Which means they can't be paid as dividends to Apple shareholders.

The day Apple repatriates those profits they'll pay the full US corporate tax rate, which is currently one of the highest corporate tax rates in the free world. Then they'll pay the remainder as dividends, which will be taxed again at the shareholder level, for a total effective tax rate on those profits of over 50%. And that tax rate is not progressive, the little old grandma with apple stock in her savings pays the same rate as a billionaire.

The fact that it's only 11% of US income tax receipts is a great argument for abolishing corporate income taxes entirely. We can replace some of it by taxing dividends and capital gains at personal income rates (as long as capital gains are indexed to inflation). But the trillions of dollars in capital trapped overseas that will return to the US will more than fill the gap. And making the US a far more attractive place to invest, increasing our productivity and GDP growth. All of that will generate even more tax revenue.

People who think the corporate tax rate is fine or that corporations should pay even more are like a medieval tax collector complaining to the king that a farmer hasn't paid enough taxes. The king says, didn't they give us a third of their corn crop this year? Yes, says the tax collector, but they've saved a huge amount of seed-corn in their barn for next years planting, we should take a third of that too!

"In 2004, the United States Congress enacted such a tax holiday for U.S. multinational companies in the American Jobs Creation Act of 2004 (AJCA)) section 965, allowing them to repatriate foreign profits to the United States at a 5.25% tax rate"

5.25% is a long way from 35%.

Or things like 'assets' such as property, cash on hand, holdings in other companies, which generally aren't taxed (or aren't taxed as salary/dividends are). Companies which do this for a long time are able to choose the moment (and sometimes the country) at which the assets are transmitted to investors. If they become big enough, they can even bully governments into changing laws to suit them.

I suggest you look at Berkshire Hathaway and evaluate this sentence in the context of that company:

> Any money that a corporation earns is either paid out as dividends (at which point it's taxable as individual income) or reinvested into growing the company (at which point it turns into things like "salary", which is taxable as individual income).

BRK pays Buffett a relatively tiny salary ($100k, another $400k in benefits, probably NetJet flights). It doesn't pay any dividends. Every dollar of after tax profit is reinvested in new businesses. Those businesses pay many people salaries and wages and those people pay many billions in taxes every year. Because of the faster compounding of Berkshires value this policy creates, when shareholders sell shares they are able to pay substantial taxes as well.

What does society gain from taking more of those profits and consuming them, instead of allowing them to be invested in supporting more jobs and creating more economic output?

Your reference to taxing assets is evidence of how completely lost you are on this topic. If a business owner invests to buy better production equipment (assets) that will increase the productivity of their workers so they can make more things with the same amount of work, it should be taxed for this decision?

Or in the case of cash on hand, which is usually retained earnings, i.e. after tax earnings that have been retained by the company for investment purposes. You really think it should be taxed again and again just because the company has it sitting in a bank account?

Our tax system is set up to tax profits and gains for very good reasons. Your tax system would be setup to make it expensive and dumb for anyone to invest or run businesses under it. If you don't like US corporations keeping overseas profits overseas, wait till tax codes changes you like force them to just become overseas corporations.

The best tax system, for conservatives, progressives, liberals, etc, is one that defers taxation of gains and profits until they are converted into individual income. It's why our retirement plans (401ks, IRAs) don't pay tax until withdrawals. It ensures their values compound far faster and gives far more incentive for people to save.

Allowing operating profits to be reinvested tax-free would also allow our GDP to grow much faster, and that will produce more available funds for social programs and spending (important if you are a progressive) and more wealth for citizens (important if you are a conservative).

Judging from e.g. Scandinavia, France, Germany etc, what they get from taxing companies is an excellent safety net for all citizens, healthcare available for all, good transport systems, good education systems etc and various other social goods. Basically, great and fair countries to live in.

You seem to be speaking as though the only possible social good is the productivity of businesses and that money that is taken in tax has effectively zero contribution to society. Standing in Europe [or Japan, or any developed economy outside the USA], that looks like a very strange thing to read.

You're basically arguing 'tax shouldn't exist because it slows companies down and generates no positive effect of it's own'. To which I will respond, "Nope. That's an ignorant argument."

Tax on companies should exist because it leads to strong public sectors that act as safety nets for societies (on an individual level, and also at corporate level during downturns).

Furthermore, companies want to stay alive by having continual government spending during a recession, they need to be putting some money in the public kitty gradually on an ongoing basis to pay for it.

I would add that your claim of reducing corporation tax provides more jobs is total junk: see the citations on the right hand side of this page: https://corporatetax.procon.org/

Job creation in the USA was highest under high corporate tax rates; and 'corporation tax holidays' are associated with massive job cuts. Still, 'facts have a well known liberal bias' so I suggest you do your own research.

Let's transfer a part of your argument to another situation and see what happens:

>If a business owner invests to buy better production equipment (assets) that will increase the productivity of their workers so they can make more things with the same amount of work, it should be taxed for this decision?

I'll rewrite this as:

>If a consumer invests to buy better equipment (assets) that will increase the productivity in their home, they should be taxed for this decision?

Yes. Because there are other needs in society beyond optimising the productivity of companies. The greatest benefits in the average citizen's life do not come from the tax efficiency or manufacturing efficiency of the companies they use products from, but from education and healthcare and policing and transport and environmental and 'safety net' and regulatory/standards systems. Stuff that needs tax.

You realize these are countries with lower corporate tax rates than the US?

> You seem to be speaking as though the only possible social good is the productivity of businesses and that money that is taken in tax has effectively zero contribution to society. Standing in Europe [or Japan, or any developed economy outside the USA], that looks like a very strange thing to read. You're basically arguing 'tax shouldn't exist because it slows companies down and generates no positive effect of it's own'. To which I will respond, "Nope. That's an ignorant argument."

That's a false argument you made, I never said anything of the sort.

> Tax on companies should exist because it leads to strong public sectors that act as safety nets for societies (on an individual level, and also at corporate level during downturns).

Taxes should exist to fund strong public sectors. That's not an argument for corporate income tax, since we can fund them with different taxes. Taxing corporate income at the personal level enables a far more progressive tax system, and the deferral of capital gains creates much more money to tax.

> I would add that your claim of reducing corporation tax provides more jobs is total junk: see the citations on the right hand side of this page: https://corporatetax.procon.org/ Job creation in the USA was highest under high corporate tax rates; and 'corporation tax holidays' are associated with massive job cuts. Still, 'facts have a well known liberal bias' so I suggest you do your own research.

Job creation in the USA was highest in the 1800s and early 1900s, before corporate income taxes were invented. In the 1950s productivity slowed significantly. Corporate taxes were so onerous in the 1950s that a substantial portion of US businesses switched to partnerships that didn't have to pay corporate income taxes.

And that fact that a small number of companies cut jobs after repatriating money suffers from both a logic and sample size issue. If Apple repatriates it's profits, it will pay them to it's shareholders. If it lays off employees later, that's unconnected, and more people will be getting hired at companies Apple shareholders invest their dividends in.

> Yes. Because there are other needs in society beyond optimising the productivity of companies. The greatest benefits in the average citizen's life do not come from the tax efficiency or manufacturing efficiency of the companies they use products from, but from education and healthcare and policing and transport and environmental and 'safety net' and regulatory/standards systems. Stuff that needs tax.

The fact that we have and can pay for all these things is because of the massive increase in productivity society has gone through since the stone age. Productivity increases makes society wealthier and enables people to pay more taxes to fund more government programs.

Or goes into a giant pile of cash sitting somewhere offshore. How would you feel about a "you haven't paid out that money as a dividend and haven't reinvested it, fork it over now" tax?

Often, the offshore money is used as collateral for loans which are then used to reinvest in the company, because the interest is often cheaper than the tax.

Eliminate corporate tax and the cash hoarding problem goes away. If it doesn't, then maybe there can be an evidence-based solution to that problem.

We have decades of evidence that this doesn't work. I used to live in Kansas where the governor made a priority of his "March to Zero" on taxes, as a guaranteed sure-fire can't-fail way to make businesses happy and lead to more investment in business in the state, more businesses relocating there, more jobs, etc.

And it was a complete and utter failure. It is now in the process of being repealed by people who were left with no choice other than to admit it failed. It is time for people who advocate this to understand that while it may sound great when deduced theoretically from first principles, it does not work in the real world.

State rates are a small factor in corporate decisions, but not an overriding one like Apple's decision to leave hundreds of billions in Ireland, or to repatriate it and pay 42% to California and the US government, to pay the remainder to shareholders to pay 20% more taxes on.

One big example: the elimination of taxes on business income did not suddenly result in much more efficient taxation, scrupulous payment of what was owed, and a boom in investment and expansion of businesses. It resulted in everybody and their brother scrambling to reclassify their personal income as the right kind of business income, in order to pay less tax. Revenue fell off a cliff and the state's deficit projections soared.

Or, its invested in assets whose utility is enjoyed by some subset of employees/investors and whose acquisition and other costs are deductible business expenses, so its taxed zero times.

Which, once again, is not Dropbox's problem to solve.