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Corporate Tax

Effective Corporate Tax Rates

March 10, 2017
Downtown Houston by Vlad Busuioc via Unsplash.

Although the U.S. has the highest corporate tax rate of any developed country beside the UAE (PDF) most major U.S. companies don’t pay anywhere near the 35% corporate income tax rate.

The New York Times reports that the effective tax rate of major corporations varies vastly by industry. American utilities pay a low 3.1% effective federal income tax rate, energy companies pay around 11.5% in federal income tax, and healthcare and retail pay more than 30% of their profits in tax.

Tax reformers say that the U.S. corporate income tax rate functions more like a strike-through price (something that looks high but rarely applies.)

More:Profitable Companies, No Taxes: Here’s How They Did It,” Patricia Cohen.

Original study:The 35 Percent Corporate Tax Myth,” Institute on Taxation and Economic Policy.

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