The Center for Tax Justice notes that the Treasury Department’s monthly statement shows the U.S. will collect $96 billion less in corporate taxes than originally thought:
The latest monthly statement by the Treasury Department contains a startling revelation: the amount that Treasury expects to collect in corporate taxes in 2012 has been slashed by more than 28 percent, from $333 down to $237 billion.
With such a dramatic revision, one might expect that lagging corporate profits or a sudden economic disruption is to blame. In reality however, corporate tax revenue continues to limp in spite of the fact that corporate profits have rebounded to record highs.
If corporate profits are not behind this $96 billion drop in expected corporate tax revenue, then what is?
The Wall Street Journal’s David Reilly suspects that there are two critical drivers: the offshoring of more profits through overseas entities by multi-national corporations; and the continuation of extravagant corporate tax breaks for accelerated depreciation of assets like equipment.
Sadly, how can we be shocked? Corporate welfare is so commonplace in this country it is laughable. As George Will writes in his Bangor Daily News op-ed on the Export-Import Bank, “In Washington, the penalty for slipping the leash of law is a longer leash and a larger purse.”
As usual, Center for Tax Justice suggests viable solutions:
In order to prevent the continued decline of the corporate tax, Congress and the President should enact revenue-positive corporate tax reform, rather than their current revenue-neutral approach. Right now, political leaders of all stripes are proposing merely to eliminate some tax breaks but continue or even expand others and possibly reduce the statutory rate. With the federal deficit growing every day, asking profitable U.S. companies to pay something closer to the statutory tax rate is a reasonable (not to mention popular) approach.