The US is a corporate tax haven.

In a post titled Crazy People, Paul Krugman quotes Grover Norquist and then comments.

Grover Norquist:  "The U.S. corporate rate is 35 percent; the European rate is 25 percent. Obama is a more international guy, so we should be close to the European average. We'll stop torturing people, we'll stop torturing corporations, and that will make us more like Europe."

This isn't some random crank: this guy was at the center of the K Street Project, the attempt to build Republican dominance in Washington. And he thinks that a few percentage points on the corporate tax rate is the moral equivalent of waterboarding.

Not only is he twisted, but Norquist misleads.  Because of abundant exceptions, credits, deductions, accelerated depreciation and amortization, lawful and unlawful income shifting, and tax havens and shelters, the effective rate paid by corporations in the US (13.4%) was below the average (16.1%) for the 19 OECD nations in 2000-05.

"As a result of these and other characteristics of the corporate income tax, the U.S. is generally considered a tax haven for corporations, and not a jurisdiction to be escaped to other more corporate-tax-friendly ones, especially in the case of some industries, such as the financial services sector."

Linda Beale at http://ataxingmatter.blogs.com/tax/2008/10/studies-on-corporate-taxes.html She goes on to explain that—

"[T]ax breaks lead to very low tax rates on certain types of investments — even negative rates in some cases. For example, a 2005 Congressional Budget Office study found that the effective marginal corporate rate — the rate paid on the last dollar of income earned and arguably the tax rate most relevant for investment decisions — on debt-financed investment in machinery was negative, estimated at -46 percent. This means that the total value of the deductions that companies may claim for such investment is much larger than the tax they pay. (Put another way, it means that other taxpayers effectively subsidize the investment.)"

Matt Yglegias has a chart showing corporate tax revenues as a percent of GDP. http://yglesias.thinkprogress.org/archives/2008/11/in_praise_of_irish_corporate_taxes.php The US is certainly no outlier.

It isn't US-based multinational companies that are disadvantaged by our tax code. It's the ordinary Main Street, plain vanilla, cash cow, purely US companies that are most likely to pay the highest tax rates.

Update on Sunday, February 20, 2011 at 05:57PM by Skeptic

Linda Beale gives additional analysis here in responding to an American Enterprise Institute complaint about US corporate tax rates.  Inter alia, she points out that while the top US marginal rates are higher than many other industrialized countries, our tax base is riddled with loopholes, with the result that those "low-tax" actually collect a higher percentage of corporate income than the US does.