Fox News' William La Jeunesse asserted that "our corporate tax rate is second highest in the world," ignoring the effective tax rate, which is lower for corporations in the U.S. than for corporations in several other countries.
Loading the player reg...
On the March 30 edition of Fox News' Special Report, correspondent William La Jeunesse asserted that "our corporate tax rate is second highest in the world," ignoring the effective corporate tax rate, which is lower in the United States than it is in several other countries.
As Media Matters for America has noted, conservatives in the media, including The Wall Street Journal, Fox News host Neil Cavuto, and radio host Rush Limbaugh, have pointed to the U.S. statutory corporate tax rate of 35 percent to claim that the United States has one of the highest tax rates in the world. In fact, according to an August 2008 report by the Government Accountability Office (GAO), "Statutory tax rates do not provide a complete measure of the burden that a tax system imposes on business income because many other aspects of the system, such as exemptions, deferrals, tax credits, and other forms of incentives, also determine the amount of tax a business ultimately pays on its income." World Bank and GAO data indicate that the U.S. effective corporate tax rate is lower than 35 percent and lower than several other nations' effective corporate tax rate.
In its August 2008 report, the GAO estimated that "[t]he average U.S. effective tax rate on the domestic income of large corporations with positive domestic income in 2004 was an estimated 25.2 percent." Moreover, in June 2007, the Treasury Department concluded: "If special provisions were eliminated, the top corporate tax rate could be lowered to 27 percent or more than 40 percent expensing could be provided to all businesses for new the cost of tangible investments, and the tax system would produce the same level of revenue." Further, in its Paying Taxes 2009 publication, based on its 2009 Doing Business report, the World Bank-International Finance Corporation estimated that the United States has a lower effective rate of current corporate tax than that of several other nations, including Germany, Canada, India, China, Brazil, Japan, and Italy. The publication also included a figure that compared effective and statutory corporate tax rates for several G8 and BRIC [Brazil, Russia, India, China] countries:
From the March 30 edition of Fox News' Special Report with Bret Baier:
BRET BAIER (anchor): President Obama said last week many of the American jobs that have been moved overseas will not be coming back, but he remains determined to stop the exodus. Correspondent William La Jeunesse reports on the unintended consequences that move might create.
[begin video clip]
LA JEUNESSE: Outsourcing has become one of the bogeymen of the recession, but the economic reality is 15 percent of all U.S. businesses -- 40 percent of those in the tech sector -- have sent millions of jobs overseas in the last 10 years to raise profits and stay competitive, a practice the president has promised to stop.
OBAMA: -- by finally ending the tax breaks for corporations that ship our jobs overseas.
REP. CHARLES RANGEL (D-NY): I don't see any good reason why we should endorse, support, or not vigorously close any shelter that's there. I don't know how it's in America's best interest to allow this to happen.
LA JEUNESSE: But it might not be that simple. As companies with millions, even billions, offshore could relocate completely out of the U.S. to dodge hefty taxes. Or they could simply spend the money overseas, boosting foreign economies rather than our own.
MICHAEL KLAYKO (Brocade Communications CEO): That would be a really tough decision. I think there'd be a lot of folks right now that would figure out how to spend that cash offshore.
LA JEUNESSE: Brocade Communications CEO Michael Klayko says up to a trillion dollars earned from foreign manufacturing and service centers run by American companies is sitting offshore.
Profits are not taxed at the local rate -- say, 12 percent in Ireland or 20 percent in Turkey. But when that money comes home, it's taxed at a combined federal and state rate of 40 percent, which could mean hundreds of billions the Obama administration desperately needs.
HEATHER BOUSHEY (Center for American Progress senior economist): The goal is not to penalize businesses; the goal is to make sure that businesses that are headquartered here in the United States pay their fair share of taxes.
LA JEUNESSE: Right now, our corporate tax rate is second highest in the world. Businesses say the main reason they outsource isn't lower taxes but cheaper labor. While closing some loopholes, Congressman Charlie Rangel says that Washington may be willing to reduce the corporate tax rate below 30 percent to keep U.S. businesses competitive and to stop the bleeding of American jobs.
In Los Angeles, William La Jeunesse, Fox News.
[end video clip]