经济政策研究所-回收企业税收（英）-2022.4-24页_452kb

Summary of Reclaiming Corporate Tax Revenues by Josh Bivens

Core Content

This report by the Economic Policy Institute (EPI) examines the erosion of state and local corporate income tax revenues and its impact on public services and economic inequality. It highlights the critical role of state and local (S&L) governments in providing essential public goods and services, such as education, infrastructure, and public safety. The report argues that the decline in corporate tax revenue is not due to a reduced ability of corporations to pay, but rather to a combination of tax cuts, the rise of S-corporations, and loopholes that allow profitable corporations to pay little or no taxes.

Key Findings

• Corporate Tax Revenue Decline: The effective state and local tax rate on corporate profits fell by nearly 50% from 5.2% in 1989 to 2.6% in 2017.
• Revenue Shortfall: The estimated revenue shortfall due to this decline is at least $43 billion and could be as high as $57 billion.
• Corporate Tax Avoidance: Over 60% of corporations in surveyed states pay no state corporate income tax. Even among corporations with over $1 billion in federal taxable income, between 11% and 27% pay nothing or nearly nothing in state taxes.
• Impact on Public Services: The loss of corporate tax revenue has constrained S&L governments' ability to fund essential services. For example, $57 billion could fund universal pre-kindergarten for all 3- and 4-year-olds.
• Economic Inequality: The reduction in corporate tax revenues has been strongly correlated with increased income inequality, particularly benefiting the top 1% of earners.
• Federal Grants Limit: While federal grants have partially offset revenue losses, they are not a long-term solution. S&L governments need stronger revenue sources to maintain public services.

Main Points

• S&L Governments' Role: They are the primary providers of public goods and services, including education, transportation, and public health.
• Employment Impact: S&L governments employ significantly more people than the federal government, with a more equitable distribution of wages and opportunities.
• Tax Transparency: There is a lack of transparency in state corporate tax data, making it difficult to assess whether corporations are paying their fair share.
• Policy Influence: The rise of S-corporations is partly a result of tax policy changes that have enabled corporations to avoid state taxes, suggesting that the decline is not inevitable but policy-driven.

Key Implications

• Revenue and Spending Correlation: There is a strong correlation between state and local tax revenue and public spending. Each dollar reduction in revenue is associated with an $0.88 reduction in spending.
• Tax Avoidance Strategies: Corporations have used legal and strategic methods to minimize their tax liabilities, including shifting profits to S-corporations and exploiting loopholes.
• Need for Reform: The report calls for fiscal reforms to ensure that profitable businesses pay their fair share, as S&L governments face legal and economic constraints that limit their ability to borrow and spend.

Conclusion

The erosion of state and local corporate income tax revenues has had a profound impact on the ability of these governments to provide essential services and manage public investment. The report emphasizes that this decline is not due to a lack of corporate profitability but rather to deliberate policy choices that favor tax avoidance. To ensure the continued provision of public goods and services, the report advocates for greater transparency and reform in corporate taxation at the state and local levels.

Supporting Data and Figures

• Figure A: Shows the percentage of corporations paying zero state corporate income taxes in surveyed states.
• Figure B: Compares employment levels across federal, state, and local governments.
• Figure C: Compares public investment as a share of GDP between the federal government and the S&L sector.
• Figure D: Demonstrates the strong correlation between changes in per capita taxes and spending.
• Figure E: Highlights the decline in corporate income tax as a share of total S&L taxes.
• Figure F: Illustrates the trend in pre- and post-tax profit margins.
• Figure G: Shows the effective tax rate on C-corporations and the impact of S-corporations on tax revenue.

Recommendations

• Fiscal Reforms: Enact necessary reforms to ensure that profitable businesses contribute fairly to state and local revenues.
• Transparency: Improve transparency in corporate tax data to allow for better oversight and accountability.
• Equitable Taxation: Address the growing share of profits reported by S-corporations, which are largely tax-exempt at the state level.

Notes on Methodology

• The data used in this report comes from state legislators' requests to their respective revenue departments.
• The report focuses on the share of corporate profits taxed at the state and local levels, and highlights the role of S-corporations in reducing taxable profits.
• The analysis is based on macroeconomic data and state-level information, with some limitations due to privacy laws and data availability.

Conclusion Summary

The report underscores the importance of corporate tax revenue to state and local governments and the need for policy changes to ensure that these governments can continue to deliver essential public services. It calls for a reevaluation of current tax policies and a commitment to fiscal fairness.