Corporate Tax Rate — 35%?

The politicians are often worked up about the high corporate tax rate in the U.S. – 35% is the number you always hear.

But a recent Government Accountability Office (GAO) report points out that the “effective” tax rate paid by corporations can and often does differ from the statutory marginal rates.  GAO notes that the profitable larger U.S. corporations paid federal income taxes for 2010 at an effective rate of 12.6% of the worldwide income they reported on their financial statements.  This is slightly lower than the 13.1% rate based on current federal tax expenses they reported in those financial statements, lower still than the 21% effective rate based on actual taxes and taxable income, and far below the top statutory rate of 35%.  And including foreign, state and local corporate income taxes, these corporations paid income taxes for 2010 at an effective rate of 16.9% of their reported worldwide income.