Are corporate taxes really too high in U.S.? and, you could pay lower taxes in Oklahoma, but you’d have to live in Oklahoma…

October 29, 2010

Time and time again I hear the claim from the pro-business or conservative set that corporate taxes in the U.S. are uncompetitively high and that is why the U.S. is at a competitive disadvantage and furthermore that taxes in California are sky high and that is why the Golden State is seen as unfriendly to business and therefore that is why California government is in such dire economic straits.

The notion that corporate taxes are higher in the U.S. than in other industrialized nations is virtually accepted as a truism among the conservative/pro-business set.

I really don’t feel I know the facts in this and I can find no easy way to get the answer.

At first reading, all I get from Wikipedia is that comparing corporate tax rates among nations is difficult because of the complexity of tax laws.

While I hear the constant refrain from Republicans on the radio that corporate taxes are too high and are higher here in the U.S. than other industrial nations, I just heard an admittedly left (or Democratic) – leaning “expert” claim that corporate tax rates in the U.S. are lower than many of the other industrialized nations — who to believe???

Also I just heard on the radio (well recently, now) and read an article that claims that far from business unfriendly, California has lower tax rates than even Texas, which seems to hold the claim among the conservative/business set that it is the most friendly to business state  — of course I do not know the accuracy of this article, interestingly enough, written by a chamber of commerce,  and that has to be difficult because chamber hacks must always slant articles to claim that taxes are too high, unless it is in their own territory and they are trying to attract businesses.

I also read that California offers a number of tax breaks to businesses, despite the actual tax rate. So businesses that know how to take advantage of such incentives or to game the system put themselves at an advantage.

And I also heard that despite Republican gubernatorial candidate Meg Whitman’s call to fire a lot of state workers to save money, California — the most populous state in the union — actually has fewer state employees per capita than many other states (but the statistics to back up this claim might be suspect — you have to realize that lobbyists, say for the public employee unions, churn out all kinds of propaganda and contact news outlets suggesting good story ideas).

Unfortunately those seeking the truth in all of this are at the mercy of those who under the guise of providing information actually provide one-sided propaganda — whose statistics do you want to believe? Objective analyses are not so easy to come by. The press has been weakened in this regard by falling profits of major old-time reliable news outlets and the pressure to produce more copy with fewer staff members and to not waste time on all that investigative stuff. Thank heavens that some outlets, such as the LA Times, are still at it, finding out such things as the inflated city manager and other top employee salaries in the city of Bell and other communities.


Add 1:

And now  I read a news story that reminds me that not only City of Bell managerial staff were raking in the dough, so were four elected and part-time city councilmen, to the tune of $100,000 per year each. The city manager was essentially paying himself close to $800,000 per year, plus it was estimated he netted some $1.5 million from illegally created contracts. In fact city officials are charged with misappropriating $5.5 million from the city where one in six people live in poverty — all this according to an Associated Press story.


(Belying to an extent my assertion of the lack of media watchdogs are those fact check or keeping-them-honest features you see from time to time — I hope that instant research is accurate.)

And here’s another point:

If you live and work and/or run a business in California, you might get by with cheaper taxes in, say, Oklahoma. But you would have to live and work in Oklahoma (no offense intended to Oklahoma).

Few people like taxes, but they are necessary in order to have a government and government is necessary in order to prevent chaos. While we may say some taxes are too high, we may actually be objecting to how they are being used. As long as the taxes are being used for a legitimate public purpose, it seems to me that it is wrong to simply call them unjust (although they still might be too high). But if they are really being used literally to line the pockets of public officials, such as was exposed in the Southern California community of Bell, then of course they are unjust. But other than that, the reason taxes are what they are is the result of policy made by elected representatives put into office by the vote of the people. It is not necessarily the government that is the enemy, it may be the majority of the people who indirectly gave their sanction to the policies government carries out by voting those who voted in the policies in the first place, or by being too busy, such as Meg Whitman claimed to be, to pay attention in the first place.


Add 2:

As an afterthought, I now realize that I should have mentioned that regardless of tax rates in the U.S. we always hear those stories about various major multi-billion corporations paying zero taxes, due to tax loopholes. So really the term tax rate becomes nearly meaningless.



I try not be anti-business, for even though I do not own a business, I know that most of us earn our living thanks to business. Then I hear this caller on a right-wing radio talk show say that he runs a small business in California and that he does not think taxes are the problem. What is the problem? Employees in California have too many rights. It’s a challenge for me to be pro-business — but I try.