That was the average effective federal tax rate in 2010 for profitable U.S. corporations, according to a Government Accountability Office report.
While the statutory federal corporate income tax rate ranges from 15 percent to 35 percent, they provide “only a limited measure of the share of income that businesses pay in taxes because many other aspects of the tax system, such as exemptions, deferrals, tax credits, and other forms of incentives, also determine the amount of tax that a business ultimately pays on its income,” according to the report released yesterday.
The report “provides more stark evidence, if any is needed, that large, profitable U.S. corporations as a whole are not paying their fair share in taxes,” Sen. Carl Levin, a Michigan Democrat who requested the report with Republican Sen. Tom Coburn of Oklahoma, said in a statement.
The report “underscores the need for comprehensive tax reform,” Coburn said in the statement.
About 55 percent of large U.S.-controlled corporations reported no federal tax liability in at least one year between 1998 and 2005, according to a 2008 GAO report.
Bloomberg’s Richard Rubin has more here about the GAO report.