Many Americans were shocked last month to learn that Republican presidential candidate Mitt Romney only paid an effective tax rate of 13.8 percent in 2010, but a recent report shows that corporations are paying even less.
Corporations in the U.S. paid only an average of 12.1 percent in taxes on the profits they earned inside the U.S in fiscal 2011, according to statistics from the Congressional Budget Office (CBO).
The Wall Street Journal reports that it’s the lowest percentage corporations have paid on those profits since at least 1972, and it’s less than half of the 25.6 percent they paid on average between 1987 and 2008.
Corporations saw their profits, however, reach an all-time high at the end of 2010. The $1.68 trillion in annualized profits in the fourth quarter of fiscal 2010 beat the previous record of $1.65 trillion in the third quarter of 2006.
The Journal credited the low rate to a temporary tax break, known as “bonus depreciation,” which allowed companies to immediately write off certain investments instead of taking write-offs over a period of years.
In an interview with NBC earlier this year, Romney flat-out stated that President Barack Obama had raised taxes on corporations.
“If you want to get the economy going, lower corporate tax rates,” he said. “He’s raised them.”
Republican presidential candidate Newt Gingrich has said the he would “create a boom of new American entrepreneurship by dramatically cutting the corporate tax rate” to 12.5 percent (PDF), one of the lowest in the developed world.
During his State of the Union Address last month, the president also opened the door to lowering the corporate rate “without adding to our deficit.” In their 2010 report (PDF), the President’s Economic Recovery Advisory Board discussed lowering the marginal rate to 28 percent.
Watch this video from The Wall Street Journal, broadcast Feb. 3, 2012.