Corporate Tax Payments Near Record Low This Year

March 15, 2002 04:08 PM | | Bookmark and Share

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The big corporate tax cut bill just passed by Congress and signed by President Bush will slash corporate income tax payments this year to their lowest level as a share of the economy since the early Reagan administration. This will be the second lowest level in the past 60 years.

The latest data from the Congressional Budget Office and the Joint Committee on Taxation indicate that corporate taxes will plummet to only 1.3 percent of gross domestic product this year. That will be the lowest since fiscal 1983, when corporate taxes bottomed out at 1.1 percent of the GDP level on the heels of the huge corporate tax reductions enacted in 1981.

Despite the expected economic recovery, the continuing effects of the 2002 corporate tax cuts will keep next year’s corporate tax payments at only 1.4 percent of GDP, the third lowest level in the past 60 years.

In comparison, over the past 60 years corporate income taxes averaged:

  • 5.6 percent of the GDP during World War II,
  • 4.5 percent in the Truman and Eisenhower administrations,
  • 3.7 percent under Kennedy and Johnson,
  • 2.7 percent under Nixon and Ford,
  • 2.4 percent under Carter,
  • 1.6 percent in the Reagan and Bush I administrations, and
  • 2.1 percent under Clinton.

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Corporate Income Taxes as % of GDP, 1942-2003
1942 3.3% 1963 3.6% 1984 1.5%
1943 5.3% 1964 3.7% 1985 1.5%
1944 7.1% 1965 3.7% 1986 1.4%
1945 7.2% 1966 4.0% 1987 1.8%
1946 5.3% 1967 4.2% 1988 1.9%
1947 3.7% 1968 3.3% 1989 1.9%
1948 3.8% 1969 3.9% 1990 1.6%
1949 4.1% 1970 3.2% 1991 1.6%
1950 3.8% 1971 2.5% 1992 1.6%
1951 4.4% 1972 2.7% 1993 1.8%
1952 6.1% 1973 2.8% 1994 2.0%
1953 5.7% 1974 2.7% 1995 2.1%
1954 5.6% 1975 2.6% 1996 2.2%
1955 4.5% 1976 2.4% 1997 2.2%
1956 4.9% 1977 2.8% 1998 2.2%
1957 4.7% 1978 2.7% 1999 2.0%
1958 4.4% 1979 2.6% 2000 2.1%
1959 3.5% 1980 2.4% 2001 1.7%
1960 4.1% 1981 2.0% 2002e 1.3%
1961 3.9% 1982 1.5% 2003e 1.4%
1962 3.6% 1983 1.1%    
Corporate income taxes, $-billions and as shares of GDP (fiscal years)
  2001 2002e 2003e 2004e 02-04e
Corporate income taxes before “stimulus” $ 151.1 $ 197.0 $ 187.0 $ 202.0 $ 586.0
Add back (+) or subtract (–) artificial shifts in corporate tax payments in 2001 tax cut act* +23.0 –23.0 +6.6 –16.4
Revised corporate taxes before “stimulus” 174.1 174.0 187.0 208.6 569.6
“Stimulus” corporate tax cuts** –37.7 –35.8 –22.7 –96.1
Revised corporate taxes after “stimulus” $ 174.1 $ 136.3 $ 151.2 $ 185.9 $ 473.5
Corporate taxes as a % of GDP 1.7% 1.3% 1.4% 1.6% 1.4%
*Takes out the effects of the two-week delay in the Sept. 2001 corporate estimated tax payment date (which shifted $23 billlion from fiscal 2001 to fiscal 2002) and a smaller shift in fiscal 2004 (from fiscal 2005).
**Excludes estimated portion of $114 billion in 2002-04 “stimulus” business tax cuts going to non-corporations.
Sources: Congressional Budget Office, Joint Committee on Taxation, Citizens for Tax Justice, 2002.

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Corporate Loophole Lobbying Conquers House

March 7, 2002 04:10 PM | | Bookmark and Share

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Related CTJ Analyses
Analysis of 12/01 Stimulus Plan 12/18/01
$7.4 Billion in AMT Relief for 16 Corporations 10/26/01
Corporate Income Taxes in the 1990s 10/19/00

The so-called “stimulus” bill that the House overwhelming passed today offers the same $114 billion in corporate tax concessions over the next three years as the failed bill House Republicans put forward last December. Despite growing public pressure on House GOP leaders to pass a clean extension of unemployment benefits, almost all House Democrats cravenly joined in kowtowing to corporate special interests instead.

The changes will wipe out more than a fifth of otherwise expected corporate income tax payments over the next three years. In doing so, the bill provides $8 in corporate tax cuts for every dollar allocated to help unemployed workers.

The centerpiece of the corporate tax-break program remains the same: 30 percent in extra “depreciation” write-offs in each of the next three years, at an estimated cost of $97 billion. This new loophole will supposedly “sunset” thereafter, but experience shows that it is more likely to be routinely extended. Last year, Democrats correctly condemned the three-year plan as far too costly and economically nonsensical.

The March 2002 “Stimulus Bill” and its Predecessor
Cost FY 2002 – 2004
  Mar. 02 Dec. 01
Corporate tax cuts  -114.0  -114.7
Individual Tax Cuts  -1.4 -56.7
Miscellaneous Tax Changes +6.3 +6.3
  Total Tax Changes –109.2 -165.1
Unemployment & TANF  -14.6  -15.1
Total cost -123.8  -180.1

Like the December legislation, the new bill offers $9 billion in tax relief to multinational corporations using offshore tax havens to shelter their U.S. profits from taxes. It also makes it easier for companies with an excess of loopholes to apply for rebates of taxes paid in earlier years, and waives the corporate alternative minimum tax’s curbs on profitable companies using the new loopholes to pay little or no tax.

Also like the earlier bill, the new bill provides $15 billion in extended unemployment and welfare benefits over the next three years.

There are some changes from the failed December legislation. The new bill drops a $14 billion Democratic effort to extend last year’s tax rebates to low-income people who were ineligible. It also scraps almost all of the other individual tax cuts in the earlier bill and drops a contentious plan to repeal the corporate alternative minimum tax (which in its December version would have cost $6 billion over the next three years).

Assuming future extension of the supposedly “temporary” corporate tax loopholes, the bill will slash corporate taxes by some $330 billion over the upcoming decade.

“Every penny of this latest batch of corporate giveaways will come straight out of the Social Security trust fund,” said Citizens for Tax Justice director Robert S. McIntyre. “Those who voted for it should be ashamed to ever again style themselves as defenders of Social Security, fiscal responsibility or tax fairness. And they should stifle their hypocritical complaints about Enron’s egregious tax avoidance, too.”


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