December 23, 2004,
Bush administration critics like filmmaker Michael Moore, a democratic socialist, say corporations are not paying their “fair share” of the U.S. tax burden. According to these anti-corporate carpers, corporations play while poor and middle-class Americans pay. Listening to them you’d think corporations are Scrooge and the Grinch all rolled up into one.
These critics, however, ignore federal data that show corporations have contributed a greater tax share to the government under President George W. Bush the same guy who lowered the tax burden on corporations. Taxes on corporate income as a percentage of current receipts have increased from 8.6 percent in the first quarter of 2001 to 10.4 percent in the third quarter of 2004. Taxes on corporate income as a percentage of current tax receipts have also risen from 13.7 percent in the first quarter of 2001 to 18.7 percent in the third quarter of 2004. (This information is courtesy of the U.S. Bureau of Economic Analysis.)
These percent increases have added up. Corporate income-tax receipts expanded from $180.7 billion to $204.9 billion in this 4-year period. Meanwhile, personal current taxes declined from $1 trillion to $794 million in the same timeframe. As a percentage of current tax receipts, personal current taxes dropped from 79.1 to 72.4 percent. Personal current taxes also fell from 50.1 to 40.6 percent as a share of current receipts.
In brief, as President Bush’s first term nears its conclusion corporations have contributed a higher share of federal tax receipts while individuals have paid a lower percentage.
This is counterintuitive to arguments advanced by Michael Moore. In his 2001 book, Stupid White Men, he wrote that the amount of taxes corporations pay has dropped, while average Americans have seen their taxes go up. He makes his argument most explicitly in this paragraph:
In the 1950s, taxes from corporations made up 27 percent of the revenues for the federal government; today that number has dropped to less than 10 percent. Who has made up the difference? You and your second job.
Let’s take a closer look at that. In the third quarter of 1954, taxes on corporate income were 27.4 percent of current receipts. That percentage share declined under a succession of postwar presidents. Yet Moore neglects to mention that the corporate share increased under Democrat John F. Kennedy (1961-63) and Republican Ronald W. Reagan (1981-1988). George W. Bush isn’t the only president whose pro-growth fiscal policies have led to corporations paying more federal taxes.
Here’s some more for Moore. Under Bill Clinton (1993-2000), the corporate tax share declined. As a percentage of current tax receipts, taxes on corporate income dropped from 18.9 percent in the first quarter of 1993 to 15.4 percent in the fourth quarter of 2000. Meanwhile, back home in Clinton’s native Arkansas, poor and middle-class individuals still pay a regressive sales tax on one of life’s essentials food. In Arkansas, Scrooge always gets a seat for Christmas dinner.
President Bush’s tax cuts aren’t the lump of coal that anti-corporate critics say they are. Corporations are paying more taxes because of them. That’s a pro-growth, supply-side thing. Michael Moore, take note.
Greg Kaza is executive director of the Arkansas Policy Foundation, an economic research organization based in Little Rock.