Oil companies pay more than their 'fair share' of taxes
President Barack Obama has been talking a lot about fairness, saying that he's in a better position than Mitt Romney to ensure that “everybody in the country has a fair shot” and that “everybody's paying their fair share.” Obama singled out the oil industry for particular criticism.
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It's true that oil companies don't pay their fair share. They pay more than that. The top corporate income tax rate in the United States is 35 percent. Yet America's three largest oil companies — ExxonMobil, Chevron and ConocoPhillips — pay taxes in excess of 40 percent.
Fair, low corporate tax rates generate economic growth, produce jobs and make goods and services cheaper for consumers. Apparently, the United States is the only country that hasn't gotten the memo. Over the past decade, the global average corporate tax rate dropped from 32 percent to 25 percent, while the U.S. rate remained the same. America now has the highest corporate tax rate in the industrialized world.
What's more, the federal government also taxes U.S.-based companies on money they make in foreign countries, in addition to income earned domestically. We're one of the only countries in the world to do so. Unsurprisingly, many business leaders are considering leaving America for countries with lower tax rates on domestic earnings and little to no tax liabilities on income earned abroad. Some already have.
The U.S. corporate tax structure doesn't just kill American jobs. It also plays favorites. In recent years, federal lawmakers have showered preferred companies with tax breaks and other preferential treatment. As a result, seemingly every corporation faces a different tax rate, depending on how good their lobbyists are and how well they exploit tax shelters. For instance, America's 20 most profitable companies paid an average of 25.4 percent in taxes in 2010. Yet General Electric paid just 7.4 percent.
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