Corporate Tax Rates and Tax Receipts

Here are some interesting data on the U.S. corporate tax rate throughout the last hundred years and a chart of federal tax receipts on corporate income as a percent of GDP.  We gathered the data from the Tax Policy Center and FRED.

Key Observations:

On Rates:

  • The corporate tax rate usually quoted is for the top bracket;
  • The corporate tax rate began to climb rapidly in 1940;
  • President Truman raised the rate from 38 % to 52 % from 1949 to 1952;
  • The tax rate peaked under Johnson/Nixon at 52.8 %;
  • President Reagan did not cut the corporate tax rate until the Tax Reform Act of 1986 (1395 pages) phasing it in over two years, reducing it from 46 % to 34 % in 1988.
  • During President Clinton’s first year in office, 1993, the corporate rate was raised to 35 percent where it has remained until today.
  • President Trump’s plan to reduce the rate to 20 percent puts it back to where it hasn’t been since 1939.

Federal Corporate Tax Receipts:

  • Corporate tax receipts peaked in 1942 at 7.52 % of GDP with a rate of 40 %;
  • Corporate tax receipts bottomed after the dot.com bust in 2002 at 1.38 % of GDP;
  • It appears that corporate tax receipts experienced a structural change in the early 1980’s and have been in the 40-year range between 1.38 % and 2.88 % irrespective of the corporate tax rate and more economically dependent. We suspect it is globalization.

We have also added a couple charts of the highest corporate tax rate countries and the lowest coming to us via the Tax Foundation.   They note the U.S. effective corporate tax rate is among the highest in the world,

The United States has the fourth highest statutory corporate income tax rate among the 202 jurisdictions surveyed. The U.S. rate of 38.91 percent (comprised of the federal statutory rate of 35 percent plus an average of the corporate income taxes levied by individual states) ranks only behind the United Arab Emirates (55 percent),Comoros (50 percent), and Puerto Rico (39 percent). Comparatively, the average tax rate of the 202 jurisdictions surveyed is 22.96 percent, or 29.41 percent weighted by GDP.  –  Tax Foundation

Corporate Taxes_Table

Corporate Taxes_Chart

Corporate Taxes_Highest

Corporate Taxes_L

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