Background on Corporations

Corporate Taxation

• A key issue in the 2012 race is corporate taxation, a major topic in the GOP presidential primary debates.
• Democrats and liberals, in general (and Obama in particular), want to increase corporate taxation by closing loopholes and removing tax breaks (not by increasing the corporate tax rate)
• Republicans and conservatives, in general, want to reduce the corporate tax rate, in some cases reducing it to zero.
• The case for reducing the rate is that the US rate is among the highest in the world: at 35%, compared to 16% for Germany and Canada, and 2nd only to Japan's corporate rate.
• The case for removing loopholes is that the effective US rate is only about 25%, comparable to the average rate for the industrialized world, due to the numerous available deductions and tax breaks.
• Of the 500 major companies in the S&P 500, 115 paid a tax rate under 20% over the past five years, and 40 paid a tax rate under 10%.
• General Electric paid zero corporate tax in 2010, despite $14 billion in profit; this topic came up in the Sept. 2011 GOP debates.
• Pres. Obama's deficit-reduction committee recommends reducing the corporate tax rate to 23% while closing most loopholes.
• GOP candidates recommend reducing the corporate tax rate, in conjunction with a "tax holiday" for corporate repatriation...

Corporate Repatriation

• One popular strategy for reducing corporate income tax is to shift jobs, operations, and profits overseas--totaling about $1.5 trillion offshore as of 2010.
• Many candidates suggest a "repatriation holiday" -- a temporary period during which profits from overseas could be "repatriated" to the US at a reduced tax rate, say 5% instead of 35%.
• Opponents of repatriation point out that in the previous "repatriation holiday", in 2004, $300 billion was repatriated, but 92% of that went to stock buybacks and shareholder dividends.
• The argument in favor of a "repatriation holiday" would be to create jobs during the current recession, which would require additional rules for another round of repatriation.

Labor Issues

• Total union membership stands at about 16 million workers, or 14% of the workforce.
• Union membership has been falling steadily since 1958, when it stood at 35% of the workforce.
• The minimum wage is currently $7.25, increased from $5.15 in 2009, by an act of Congress.
• The last increase took place in three stages over a period of years; another increase will require another act of Congress.
• Some candidates want to increase it again now, and automatically increase it to keep up with inflation (known as "indexing").

More labor issues, plus farming issues, are covered on the Jobs page.

Foreign trade and import regulations are covered on the Free Trade page.
Corporate welfare issues are covered on the Government Reform page.
Earned-income Tax Credits are covered on the Tax Reform page.