In the know: US Income Tax Report

A study by Citizens for Tax Justice and the Institute on Taxation and Economic Policy reported that 280 of the nation’s most profitable companies paid an average of half the 35 percent corporate income tax rate.

The distribution puts only about a quarter of the companies paying close to the 35 percent rate. At the opposite extreme, about a quarter paid less than 10 percent. Of the 280, 78 companies paid zero tax; some even had a negative tax rate.

Sure enough, the corporate world has no shortage of rebuttals.

I am in no position to comment on the accuracy of the report, which brings me to the issue at hand ““ our complicated tax code. Those who have tried their hand at do-it-yourself income tax reporting know this in the core of their souls. Just a glance at those Form 1040s is enough to make a grown man weep.

Tentatively setting aside the fact that it is thoroughly unjust (as is all regressive taxation), Rick Perry’s flat tax seems to me to be a step in the right direction. Any conversation about the tax code must begin with simplification and to that extent Perry’s childish simplicity is just what we need.

We are all so used to our situation that we don’t realize how ridiculous it is. We have an entire secondary industry devoted to decoding tax laws. We have people spending entire careers perfecting the art of the find-the-tax-loophole.

Under-taxation is of course not limited to the corporate world. For example, on the scale of the household, there are tax companies that automatically add deductions for fictitious campaign donations come elections.

Of course the amount lost by the government is incomparable, but the point remains that this convoluted tax code is the soil on which all these offenses flourish.

The right and the left have different prescriptions for “fixing” the tax code. But I think both could agree that we need it simplified first. I’m sure the 99 percent would appreciate it.

Email Dolom at rdolom@media.ucla.edu. Send general comments to opinion@media.ucla.edu.

Leave a comment

Your email address will not be published. Required fields are marked *