As growing inequality has steadily increased in American society, major multinational companies have been benefiting from lower and lower tax rates the world over, according to a new report from the Financial Times.
The paper conducted a study of the taxes paid by the top 10 multinationals across nine different sectors. These companies now pay 9 percent less in taxes than they did before the 2008 financial crisis, the Times found. And since 2000, the amount they paid in tax has dropped on average by one-third, from 34 percent to 24 percent, the report found.
“These results highlight how the long downward trend in corporate tax rates set by the countries that make up the OECD continued at a time when taxes on consumers and workers were rising after the financial crisis,” reporter Rochelle Toplensky wrote.
About half of the decrease since 2008 is attributed to reduced tax rates, according to the report, while the other half likely due to tax avoidance schemes.
Toplensky notes that since 2008, personal taxes in rich countries have risen 6 percent, while corporate rates have fallen by 5 percent on average. As many countries, especially in Europe, embraced austerity as a response to the economic downturn, governments' treatment of these sprawling corporate giants was anything but austere.
Michael Devereux, an Oxford University business tax professor, told Toplensky he didn't see the interstate competition for low corporate rates subsiding anytime soon.
This is what's really troubling.
When the GOP passed its massive tax overhaul in 2017, cutting the corporate tax rate from 35 to 21 percent, Republicans frequently cited argued that we need to slash rates to attract more companies from other countries. But if all other countries embrace this logic, we end up in a race to the bottom to benefit corporations —a phenomenon we already see at the state level.
These low rates—and the fact that corporations continually find ways to avoid paying what they owe—cost the government money needed for key social programs. Conservatives then use deficits, which they intentionally increase, as an excuse to cut government spending that's meant to help the kinds of people who see no benefit from a corporate tax cut.
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