Fueled by a weak economy, increasing tax breaks and heavy tax sheltering, corporate income taxes have reached an historical all-time low. According to the Congressional Budget Office, these revenues will remain at very low levels, even after the economy has recovered and possibly after the 2002 and 2003 tax bills have expired.

According to Citizens for Tax Justice, Bush’s 2002 and 2003 tax bills gave corporations tax breaks that estimated a total of $177 billion in fiscal years 2002-2005. The chart below reflects the annual reduced (-) income tax amounts in billion dollar increments.

Source: Joint Committee on Taxation, 2002 and 2003 (except as noted).

While a weak economy has undoubtedly played a part in the loss of revenue generated from corporate taxes, other causes of reduced corporate income taxes include:

• Bush’s Tax Cuts
• Bush’s 2002 and 2003 tax bills provided the largest corporate tax cuts since the early 1980’s.
• At only 1.2% of the economy, corporate taxes are currently the lowest they have been since the 1930’s; except for one year during Reagan’s first term when corporate taxes produced 1.6% of the economy.
• Tax Sheltering
• Corporations and their accountants have become extremely aggressive with tax shelters.
• Corporations partake in huge amounts of offshore tax sheltering. The exact costs of offshore tax sheltering are unknown, but reasonable estimates are $50+ billion a year.
• The Bush Administration has turned a blind eye to tax sheltering.
• Corporate Loopholes
• Loopholes have reduced corporate tax payments by $100+ billion per year.
• These loopholes have created a more than 40% reduction in corporate tax revenues since the year 2000.

Continuous declines in corporate income tax revenues will indeed result in an even larger federal deficit. A combined analysis from the Center on Budget and Policy Priorities, the Concord Coalition and the Committee for Economic Development reflects an estimated $5 trillion federal deficit by the year 2013. Despite these facts, Bush continues to support billions of dollars in tax breaks for both domestic and overseas corporations.

Sources:

1. Center on Budget and Policy Priorities, “The Decline of Corporate Income Tax Revenues,” October 24, 2003.
2. Citizens for Tax Justice, “More Corporate Tax Shelters on the Way,” October 14, 2003.
3. AFL-CIO, “Bush Supports New Tax Breaks for Companies that Ship Jobs Overseas,” April 2, 2004.
4. Robert S. McIntyre, Director of Citizens for Tax Justice. April 7, 2004.