The bogus corporate tax rate talking point

Republicans seeking more tax cuts in the stimulus claim American companies pay higher taxes than the rest of the world. Wrong again.

By Andrew Leonard

Published February 3, 2009 3:15PM (EST)

Watching a serious economist tackle Rush Limbaugh's Wall Street Journal opinion piece from last Thursday, "My Bipartisan Stimulus," is oddly disorienting. The University of Wisconsin's Menzie Chinn lives in a world where facts and attention to detail really matter; Limbaugh doesn't. He requires special handling.

But Chinn does get right to the point in his headline: "Budget Surplus? Tax Cut! Budget Deficit? Tax Cut! High Energy Prices? Tax Cut! Deep Recession? More Tax Cuts!" And in the course of his blog post, he provides the useful service of pointing to source material that exposes a favorite Republican talking point -- the notion that U.S. corporations pay higher taxes than corporations in the rest of the world.

Republicans are remarkably disciplined on this issue. Regardless of the topic, if you wait long enough, the corporate tax complaint will surface. Last Friday, when I appeared on Warren Olney's "To The Point," economist Peter Ferrara robotically reiterated the mantra: the 35 percent corporate tax rate is supposedly among the highest of all industrial nations. I knew at the time that the assertion had been widely questioned, but I didn't know what authority to cite, so I let it go.

Menzie Chinn to the rescue. This morning, he points to another post of his from two years ago, referencing the Congressional Budget Office report, "Corporate Income Tax Rates: International Comparisons." The CBO report found that in some cases the effective tax rate on American corporations was lower than comparable rich countries, and in most cases roughly similar.

Rush Limbaugh, of course, will never stop repeating his talking points, nor, apparently, will Republican politicians, no matter how many elections they lose. For the rest of us, however, it's nice to know that when they make their aggrieved assertions about the poor, pitiful, oppressed-by-government American corporation, we can say, not so fast, and point to a document.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Rush Limbaugh