Class Warfare Blog

December 22, 2017

I Wonder … Is This Another GOP “Oops Moment”?

In the recent discussions of business taxes people kept quoting the, now old, marginal business tax rate of 35% when they compared our business taxes with those of other countries. Our marginal rate, that is our highest rate, is indeed higher than most all other comparable countries when you do that comparison. But if you compare our effective tax rates with those countries, the amounts that actually get paid (after all of the loopholes and “special tax credits” and … are factored in) we tend to be lower than most. Under the old system, the rate started at 15% and climbed to 35% as the taxable income rose. (This was exactly parallel to the personal tax bracket structure that also started at 15%, then rose up to 39.5% on income over about a quarter of a million dollars.) But do note that a business was taxed at the 35% rate only on earnings in excess of $10,000,000, so you are not talking about Mom and Pop operations paying anything at that rate. (Constantly referring to small businesses as if they were Mom and Pop businesses (they are not) and only quoting that 35% marginal rate is a form of lying, in my opinion.)

Under the new law, just passed, the business tax rate has been made a flat rate at 21%, that is anything over $1 (one dollar!) will be taxed at the single rate of 21%. I thought they had just reduced the marginal rate to 21% (from 35%) and kept the lower brackets leading up to that, which would mean the 21% only applied to earnings over ten million dollars, but apparently they did not. I am shocked at this because the effective tax rate has been lower than 21% for quite some time. For example, 288 “big and profitable” Fortune 500 corporations paid an average effective federal tax rate of just 19.4% from 2008 to 2012. This new rate of 21% represents a tax increase on those businesses (if there are no other compensating changes).

I wonder if the Repubs made a mistake in framing this that way. I wonder if they think they got a “two fer” in getting a big business tax rate deduction plus a flat tax, two Republican wet dreams of the recent past, and just fucked it up out of good, old fashioned American incompetence.

If this is true, life is good!

 

6 Comments »

  1. They may have favorably fucked it up since I don’t think too many even read it, let alone know anything about tax or business. I suppose the only way I’ll know what I’m in for is when I file. Screwed, or screwed less. I’ll let you know

    Liked by 1 person

    Comment by jim- — December 22, 2017 @ 10:29 pm | Reply

  2. They are not really concerned about the smaller businesses, the mom and pop places, as those do not donate. The attempt was to give the very wealthy ( corporations and people ) as large a kick back as possible. Then when they claim the government is starved to near death, they will insist on cutting safety, assistance, and educational programs because there is no way to raise taxes on those same wealthy. All this is my opinion only. Hugs

    Liked by 1 person

    Comment by Scottie — December 23, 2017 @ 11:13 am | Reply

    • As usual, we do not disagree. What I was saying is that these politicians talk about small businesses as being Mom and Pop affairs to make them seem like they are ordinary folks, then talk about 35% tax rates, that all but the biggest corps never pay. Heck, law firms are small business, as are many hedge funds, making billions of dollars per year. It is not about how much money is involved, it is about how many owners there are. They want you to think that small business are small (they do not have to be) and that they are subject to very high tax rates (they are not). I wonder why they lie, so? (Hint: to get their paymasters a tax cut.)

      On Sat, Dec 23, 2017 at 11:13 AM, Class Warfare Blog wrote:

      >

      Liked by 1 person

      Comment by Steve Ruis — December 23, 2017 @ 11:53 am | Reply

  3. So if the tax reform makes the corporate tax to be flat 21%, it’s basically a tax hike on all the small businesses that Republicans pretend to like so much.

    Like

    Comment by List of X — December 23, 2017 @ 9:51 pm | Reply

    • Yep. I could be mistaken, but that is the best information I can find on this bill which was held secret for so long.

      On Sat, Dec 23, 2017 at 9:52 PM, Class Warfare Blog wrote:

      >

      Like

      Comment by Steve Ruis — December 24, 2017 @ 8:31 am | Reply


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