The question is: Which presidential candidate is sponsored by corporate interests, and which candidate actually cares about improving the economy and the lives of Americans?
“Let’s face it. Hillary Clinton has been bought and paid for by corporations. It’s common knowledge, but her supporters don’t seem to care. On the other hand, Donald Trump makes more in an hour than these lobbyists can afford. He can’t be bought, and he knows enough about the economy to make some real changes.”
Hillary Clinton has vowed to “raise the corporate tax rate”, even though few voters believe she she’d ever bite the hand that feeds her. On the other hand, Donald Trump has promised to lower the corporate tax rate, while closing the tax loopholes and ensuring that businesses pay their share in taxes. An approach the economists say would stimulate the economy.
U.S. businesses have amassed an overseas cash stockpile of more than $2.4 trillion because they aren’t paying their taxes, according to several financial watchdogs.
The Economic Policy Institute and Americans for Tax Fairness argue that U.S. corporate profits are at record highs while business tax revenue as a share of GDP is at record lows. Businesses can take advantage of loopholes to lower their bills to the United States, including one that enables them to indefinitely postpone the payment of taxes on profits earned overseas. Economists estimate that this strategy costs the U.S. Treasury about $126 billion a year in lost revenue.
“The facts show that corporate America is not overtaxed and, in fact, goes to extraordinary lengths to avoid paying what they owe,” said Frank Clemente, executive director of Americans for Tax Fairness. Tax laws simply need to be enforced. “We hope this book of data can help change the false narrative on taxes peddled by wealthy corporations and their allies in Washington.”
The U.S. marginal corporate tax rate of 35% is the highest among the industrialized countries that are members of the Organization for Economic Cooperation and Development. Those who see that rate as too high have long argued that it places U.S. businesses at a competitive disadvantage.
“A lot of large, multinational corporations are trying to lower their tax bills,” said Donald Blair, a budget analyst with EPI. “They’re holding out for another 2004 tax holiday,” which allowed companies to repatriate cash held abroad at a much lower rate than usual.
Apple (AAPL), Pfizer (PFE), Microsoft (MSFT) and General Electric (GE) now account for roughly one-quarter of the overseas cash pile generated by U.S. companies. According to data from Credit Suisse cited by the EPI’s Blair, about half of U.S. foreign earnings are repatriated or earmarked for future repatriation.
The U.S. is one of the few countries where companies are subject to tax on their profits regardless of where the profits occur instead of a “territorial” system that exempts foreign profits of foreign multinationals from domestic taxation. Having the highest corporate statutory rate doesn’t help matters either, according to Tax Foundation economist Kyle E. Pomerleau.
“This means if a company wants to invest in a new factory that would employ workers, it needs to think about what the additional tax will be on that next investment,” he wrote in an email. “Although the effective rate is important in many respects, it usually has little to do with how the tax impacts the economy. Reducing marginal tax rates would be beneficial regardless of what you think the level of taxation should be.”