A Bunch Of Mega-Corporations Want To Kill Corporate Tax Reform

This post originally appeared at The Fiscal Times.

On the surface, large, publicly traded, U.S. firms appear united in their desire to push for a lower marginal tax rate on their profits as part of a broader corporate tax overhaul. Multiple business advocacy organisations and a string of Republican lawmakers say dropping the top federal U.S. corporate rate from 35 per cent to 25 per cent would boost U.S. companies to hire and invest.

However, getting to either a 25 or 28 per cent rate without adding to the federal deficit can unleash a feisty conflict among businesses about who ultimately funds a rate cut. Some large companies, including Disney, UPS, and Macy’s, pay more than 35 per cent effective tax rates according to their most recent annual reports, unable to take advantage of corporate tax breaks and loopholes in the code.  Companies with vast overseas operations such as Cisco, Google, and Pfizer pay 18, 21, and 22 per cent effective tax rates respectively by leveraging billions in tax breaks, in most cases through stashing income abroad

“As soon as you start talking about particular loophole-closers that’s when you divide the corporate community and the battle starts.”

For the former group, a 10 per cent rate cut would be a flat-out gain, but for the latter group the potential loss of tax breaks and overseas tax deferral and transfer pricing maneuvers to finance lower marginal rates could mean higher tax bills. 

Read the rest of this story at The Fiscal Times >

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