Are Corporations Paying Their Fair Share In Taxes?

Published on: 05/03/2021

In this edition of Chart Talk, Tony Ogorek and Jeff Viksjo discuss corporate tax rate and whether they are paying what they should be.




Welcome to this edition of Chart Talk.  I’m Tony Ogorek, I’m here with Jeff Viksjo, and today we are taking a look at corporate tax rate and whether they are paying their fair share.  So Jeff, this is a spectacular chart that goes back to WWII to the present, and shows sort of the balance between income tax payments, social security, and corporate taxes.  What kind of observations do you see here?


The dark grey bar shows the share of taxes paid by corporations.  It was fairly high in the early part of the 40’s and 50’s, you can see it was about 25-30% their share.  That shrunk to really today it’s almost 5-10% they’re paying.  That has shifted the burden then onto individuals.  The dark blue line is individual taxes and the light grey in social security.


Now, we do have a wage ceiling for people paying social security taxes, which is about $143,000.  So, if you’re making less than that, you are paying the full shot in social security taxes.  If you’re paying above that, you have sort of a relatively free ride.  So, the bottom line is, a lot of the bills of government have shifted from corporations to individuals, and in fact, lower earning individuals.  And that’s a question of fairness we have to look at.  Now also, corporations just don’t have to be headquartered in the United States, right?


Yeah, so if we look at tax cuts were between 40 and 50% back in the 40’s and 50’s.  They fell to 35% with Regan in 86, and then down to 21% just recently with President Trump.  So moving them to 25%, number one, wouldn’t be a big jump based on where they were recently.  What’s driving these cuts is to be more competitive on a global scale. It’s been a race to the bottom with other countries trying to get the lowest rate, entice corporations to go to their country.


Right. So, in addition to bumping up the corporate tax rate a little bit here, what the administration is trying to do is to get all the other countries together and say look, nobody benefits if it’s a race to the bottom, a race to a zero rate, trying to attract corporations that way.  So, if we can put our heads together, all of us could derive a little bit more revenue from corporations and relieve some of the burden on the individual tax payer.  So, hopefully this gives you a little bit of insight into what’s going on with the corporate tax situation in the country.

We thank you for joining us.  Look forward to seeing you again.


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