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Debating why large corporations pay a fraction of legal tax rate




Democratic presidential hopeful Sen. Bernie Sanders requested the analysis of corporate taxes because a major component of his campaign is denouncing what he decries as unfair special treatment of so-called corporate America.
Democratic presidential hopeful Sen. Bernie Sanders requested the analysis of corporate taxes because a major component of his campaign is denouncing what he decries as unfair special treatment of so-called corporate America.
KENA BETANCUR/AFP/Getty Images

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Newly crunched data shows two-thirds of American corporations paid no federal income taxes in each year from 2006-2012, according to the U.S. Government Accountability Office (GAO).

Democratic presidential hopeful Sen. Bernie Sanders requested the analysis of corporate taxes because a major component of his campaign is denouncing what he decries as unfair special treatment of so-called corporate America.

The GAO states: "Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives..."

Corporations that make capital investments, such as equipment or real estate, enjoy significant tax reductions. Some economists argue those incentives help stimulate growth in the economy overall, but others say evidence does not support that claim.

The statutory tax rate is 35 percent, but if the majority do not pay that rate, how should it impact policy discussions about taxes? Are current tax exemptions fair and stimulative, or are corporations shirking their duties to contribute to public spending for roads, schools, and the like?

GAO Corporate Income Tax Report

Guests:

Dean Baker, Economist and Co-Director, Center for Economic and Policy Research - a D.C. based think tank

Veronique de Rugy, Economist and Senior Research Fellow, The Mercatus Center at George Mason University - a research center for market-oriented ideas