Posted on 02/15/2023 12:31:43 PM PST by SoConPubbie
Despite recently passing legislation that will impose hundreds of billions of dollars in taxes on America’s job creators, my Democratic colleagues are using a new Government Accountability Office report as justification for a push to raise taxes even further on businesses they think aren’t paying their “fair share.” But the report, which examines the average effective tax rates of large corporations before and after the Tax Cuts and Jobs Act of 2017, argues more in favor of the GOP reforms than Democrats admit.
Issued on the request of the Democratic leaders of the Senate Finance and Senate Budget committees, the report elicited pronouncements from that side of the aisle that the GOP tax reforms provide corporate windfalls. The day it was released to the public, then-Budget Committee Chairman Sen.
Bernie Sanders
railed, “We need to repeal the Trump tax breaks for the rich and demand that the largest corporations in America finally start paying their fair share of taxes.”
My colleagues are particularly concerned about the report’s finding that the number of profitable large corporations paying no federal income tax increased in 2018, but they ignore the potential explanations the GAO offered. The report states that there are “a number of reasons” corporations may not have had to pay federal income taxes in 2018. In particular, the GAO notes that corporations may have used losses from other years to offset what they owed. Or they may have claimed bonus depreciation, a measure the Tax Cut and Jobs Act extended that allows businesses to deduct 100% of the cost of certain assets. Even then, as noted in the report, this “could result in more tax collection in later years as corporations would then be unable to claim deductions for items already fully depreciated.” These are both examples of normal business behavior and don’t keep companies exempt from federal income tax indefinitely.
The real headline from the GAO analysis is how consistent corporate tax revenue has remained, notwithstanding the changes made by the Tax Cut and Jobs Act. The report states clearly that actual corporate tax revenue remained relatively stable from 2014-18, the period the GAO observed. In fact, overall corporate tax collections are doing better than anticipated. As these pages noted, the Congressional Budget Office’s estimate for overall corporate tax revenues in fiscal 2022 fell from $389 billion to $353 billion after the 2017 law was enacted. Yet when fiscal 2022 closed out, the CBO indicated that revenue totaled $425 billion—approximately 20% above what the CBO expected after the reforms became law.
Moreover, corporate taxes are only one slice of the federal revenue pie, which hit new records after 2017. In the years since, federal tax revenue averaged about 17.3% of gross domestic product, according to the Tax Foundation. This was “higher than most years” before the tax cut and higher than the post-war average of 17.2%. For the most recent fiscal year, which ended in September 2022, federal tax collections were at a multidecade high of approximately 19.6% of GDP. In all of U.S. history, federal tax collections have only been that high three times. Once, during the dot-com bubble, it hit 20%. The other two times were midway through World War II: Revenue hit 20.5% of GDP in 1943 and 19.9% in 1944.
As Washington debates raising the debt ceiling, congressional conversations should be dominated by the question of how the U.S. can continue to pay its bills on time and spend more responsibly—discussions that are long overdue. But the Tax Cut and Jobs Act isn’t a part of the problem; it’s part of the solution. Despite reduced corporate and individual tax rates, revenues reached an all-time high of $4.9 trillion last year. If Congress preserves and builds on those pro-growth tax reforms, it would help reignite our economy and restore fiscal sustainability. If Congress instead goes the route Democrats are proposing, get ready for more fiscal and economic pain.
Mr. Crapo, a Republican, is a U.S. senator from Idaho and ranking member of the Senate Finance Committee.
Same story every time.
Yeah let’s tax the hell out of big corporations. When they lay off we won’t mention each worker probably pays $15,000.00 to $ 35,000.oo in taxes each year.
Kennedynomics.
“in September 2022, federal tax collections were at a multidecade high of approximately 19.6% of GDP. In all of U.S. history, federal tax collections have only been that high three times”
Keeping expanding the public sector while collapsing the rest of the economy is what causes numbers like this.
Hey moron, throw out trillions and trillions in stimulus and be shocked that there is record taxes collected.
The same story in a lot of ways. It also means that our deficit is a result of insane over-spending. Not tax cuts.
Another gem of wisdom from “SAUNDERS—I NEVER OWNED A BUSINESS—politician.
I would bet he cannot even balance his checkbook.
True words. With proof that cutting rates yields more revenue
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