Corporate Execs Offer to Give Up Tax Breaks in Return for Lower Rate

June 7, 2011

From the Los Angeles Times:

Executives from four large U.S. companies told lawmakers that they would give up lucrative tax breaks in exchange for significantly lowering the 35% corporate rate, spurring efforts to overhaul the tax code.

Executives from Boeing Co., Sears Holding Management Corp., Emerson Electric Co. and Perrigo Co., a leading pharmaceutical manufacturer, said Thursday that they prefer the simplicity and certainty of a rate as low as 25% over the complexity of calculating frequently shifting tax breaks.[…]

A recent survey by the firm of 318 top financial officials at U.S. companies found that more than 60% wanted to keep their existing tax breaks unless the corporate tax rate was reduced to at least 25%. But 17% said they preferred to keep their tax breaks no matter how much the rate was cut.[….]

The combined U.S. federal and local corporate tax rate this year – at 39.2% – was second only to Japan’s 39.5% among the 34 industrialized nations in the Organization for Economic Cooperation and Development.

But including all U.S. tax breaks, the average effective rate for large companies was 27.7% from 2006 through 2009, according to a recent study by PricewaterhouseCoopers for Business Roundtable. That rate still was the fourth highest among Organization for Economic Cooperation and Development nations.

More evidence that statutory rates matter just as much as effective rates.

More on corporate tax reform here.

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