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Mid-April, despite the warmer weather, is a dreaded time for many Georgians.
It’s the worst of allergy season. Pollen, go away! It’s also time to settle up with Uncle Sam.
Monday was the deadline to file income taxes. Against that backdrop, PolitiFact Georgia thought it’d be worthwhile to examine an often-repeated claim about corporate taxes that again made the rounds as April 15 approached.
U.S. Sen. Bernie Sanders, I-Vt., was recently on the HBO late-night program "Real Time with Bill Maher." The senator and Wall Street Journal editorial board member Stephen Moore were debating whether the United States has the highest corporate tax rate in the world.
Moore: "We have the highest corporate tax rate in the world, senator."
Sanders: "No we do not."
Moore: "Yes we do. Thirty-five percent. The Tax Foundation says the United States of America has the highest corporate tax rate."
Sanders: "And who funds the National (sic) Tax Foundation?"
Maher: "Whoa! Whoa! Whoa! Whoa! Whoa!"
The Tax Foundation defended its research in a news release and an open letter to Sanders a few days later. "Yes, Sen. Sanders," the headline read, "We Really Do Have the Highest Corporate Tax Rate in the World."
The foundation posted nearly the same message on Twitter.
The foundation said that as of April 2012 the United States had the highest corporate tax rate in the developed world. The U.S. rate is 35 percent, but many say it’s even higher (39 percent) once you include other factors. Japan previously laid claim to that title, the foundation and other news organizations said, but it lowered its rate last year by a few percentage points. The decrease varies, depending on the news source, but all now put Japan below the U.S.A.
Here’s the foundation’s 2012 list of the top three nations with the highest corporate tax rates, excluding Japan:
United States 39.1
The foundation’s numbers include a weighed average of state corporate taxes. The Washington, D.C.-based, nonpartisan foundation celebrated its 75th anniversary last year.
America’s high corporate tax rate was an issue during the 2012 presidential race. President Barack Obama proposed lowering the federal rate to 25 percent for manufacturers and to 28 percent for all other corporations. Republican nominee Mitt Romney wanted to lower the rate to 25 percent for all corporations.
A major complaint about America’s tax system is it is too complicated. Examining corporate tax rates is complex. For example, Sanders said the U.S. may have the highest nominal tax rate, but it is not the highest effective tax rate. The effective tax rate takes into consideration deductions and exemptions. The foundation also discussed the effective tax rate in its letter to the senator.
"Even when including all deductions and credits available to companies to lower their tax liabilities, the ‘effective’ tax rate of U.S. corporations is still among the very highest in the world. The most recent studies show a U.S. effective corporate tax rate of roughly 27 percent, compared to an average of 20 percent for other developed countries," the foundation wrote.
A few larger corporations pay no net federal income tax at all, some research shows.
PolitiFact Texas recently tackled the question when a Texas congressman said the U.S. had the highest corporate tax rate in the world in a voter’s guide. The congressman, Michael McCaul, used information from the Tax Foundation to support his claim. PolitiFact Texas, citing the various reports about effective tax rates, gave the claim a Mostly True.
We asked Tax Foundation spokesman Richard Morrison whether there was any additional information or context that might be useful for our research. Morrison said the information McCaul used appeared to be up to date.
To sum up, the Tax Foundation said the United States has the highest corporate taxes in the world. The organization did mention the debate about where the U.S. stands if you consider effective rates. Some say that context lowers America’s standing from Numero Uno, but not by much. We rate this claim Mostly True.
Tax Foundation news release, April 12, 2013.
Email from Tax Foundation spokesman Richard Morrison, April 15, 2013.
HBO "Real Time" clip with U.S. Sen. Bernie Sanders, April 9, 2013.
PolitiFact Texas, "Michael McCaul says the U.S. corporate tax rate is world’s highest at 35 percent," Nov. 1, 2012.
Tampa Bay Times, "Corporations shun tax duty," April 13, 2013.
The Washington Post, "Obama’s corporate tax rate," Oct. 3, 2012.
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