Speaker of the House of Representatives Paul Ryan said in an interview with the Associated Press on September 13th, “It is a terrible tax system that was written in ’86. … The headlines write themselves: We tax our corporations at 35 percent, and successful small businesses are taxed as high as 44.6 percent. The average tax rate in the industrialized world for businesses is 22.5 percent.”
Donald Trump promised his supporters that he would cut corporate taxes to 15%. Speaker of the House of Representatives Paul Ryan now says that in reality, it will be around 20%
"The numbers are hard to make [15%] work. [President Trump] obviously wants to push this as low as possible and I completely support that, but at the end of the day we got to make these numbers work," Ryan said. "I think our goal is to be at or below the industrial world average, and that's 22.5%. So our goal is to get in the mid- to low 20s."
The Republican House framework for tax reform is planned to be unveiled on September 25th.
Here’s what House Speaker Paul Ryan is saying about corporate taxes and why the U.S. must lower them: “We tax our corporations at 35 percent, and successful small businesses are taxed as high as 44.6 percent. The average tax rate in the industrialized world for businesses is 22.5 percent.”
We don’t tax our corporations at 35 percent. That’s the official rate by law – the statutory rate. But it doesn’t include corporate tax deductions, which are abundant. The effective tax rate – what corporations actually pay after all deductions – is just 18.6 percent.
Small businesses aren’t taxed at 44.6 percent. A 2013 study commissioned by the National Federation of Independent Businesses found that the average effective tax rate for small businesses is 21.3 percent. Source:
The average tax rate in the industrialized world for businesses is not 22.5 percent. Ryan got this number by averaging the statutory tax rates for all the countries in the OECD, including small countries like Iceland. When weighted according to the size of the economy, according to the Tax Foundation, the average statutory corporate rate in the OECD is 31.4 percent. Source:
Bottom line: Ryan is putting out fake facts. In reality, U.S. corporations pay about the same tax rate as corporations in other major economies. There's absolutely no justification for a corporate tax cut.
By Nicole Lewis
