San Francisco, CA -- (SBWIRE) -- 12/28/2012 -- As the debate widens in the Capital today, Corporations are taking the least amount of the financial burden. This week, small businesses were angered when 160 chief executives for large public companies announced that more tax revenue would be needed to reduce the federal government's $16 trillion debt, a move that was not only unsupported by business groups, but detrimental to them as well.
The Roundtable CEOs, who made the announcement, are supporting the initiative to raise taxes on small businesses to increase tax revenue but decided that corporate tax rates should be lowered as well. The result is that these CEOs threw small businesses under the bus, while they simply avoid the new taxes. Due to tax-avoidance strategies and the clever use of federal tax breaks, large corporations are able to avoid their statutory tax rate which is at 35 percent (the highest in the world). Currently the average tax rate that corporations pay is at 12.1 percent a staggering 12.9 percent lower than their supposed tax rate.
In Washington, President Barack Obama considers the option to reform corporate taxes next year if GOP representatives will ok the higher tax rates on wealthy citizens. This deal to resolve the fiscal cliff involves a corporate tax rate reduction to 28 percent and abolishing many of the tax breaks that corporations currently receive.
Republicans have yet to respond to the president's proposed compromise, but have previously stated that their party wants the corporate tax rate lowered to 25 percent while additionally removing the taxes placed on a U.S. company's foreign earnings. The current tax system on corporations allows the U.S. government to tax domestic companies based on foreign profits as they are brought back to the United States. The argument for this is that the reduced taxes will increase the rate of economic recovery and promote growth.
Democrats and other liberal groups offer that corporations should be asked to pay more and that they already pay too little. The increase in revenue from increase corporate taxes would help decrease the U.S. deficit while simultaneously stabilizing the countries financial issues. The opposition to such plans want to instead create revenue by cutting spending and entitlement programs like Social Security and Medicare. To Democrats and liberal groups, cutting spending without increasing revenue is unacceptable.
Citizens for Tax Justice legislative director Steve Wamhoff offers that both plans are needed to be enacted to recover from these financial problems. Cutting spending to those programs while increasing corporate taxes and taxes on the wealthy will open up debate and compromises will need to be made, however hard they may be. At this point it is up to the lawmakers to make these tough decisions.
SBWire: Businesses Bob and Weave Fiscal Cliff Sacrifices Reports Taxation Center