America’s soon-to-be 45th President, Donald J. Trump, wants to cut the federal income tax rate U.S. corporations pay from 35% to 15%.
While that appears to be a gift to companies who most Americans don’t believe pay their fair share of taxes, it really and truly isn’t.
What it would be is a gift to the federal government, and to you, and to me.
Hardly any U.S. corporations, big or small, pay the 35% federal income tax rate in the first place. In fact, the so-called statutory rate isn’t a flat 35%, it’s a progressive rate that goes from 15% up to 35% depending on how much pre-tax income (before credits) companies make.
The truth is most corporations have a federal effective tax rate (ETR) of about 14%, so making the national rate a flat 15% would be a win-win for the federal government and the average citizen.