the percentage of GDP paid by corporations in the US puts us firmly in the middle or low end, depending on how you measure it.
Dave was correct to add the instructive statement, "depending on how you measure it".
In that truth lies a big part of the problem for me.
Let me suggest two of the fundamental issues in determining how much of a tax is "paid" by corporations (in distinction to people). The first comes from economic theory on corporate profits (Business Funding = BF). The second from demand-elasticity of pricing (Elasticity = E).
The way I am going to discuss who "paid" will depend on where the burden of payment occurs not who wrote the check to pay the tax bill. Keep in mind that statistic will not appear quantitatively in any government data series.
BF - Classical economic theory of business (corporation) describes two types of profit, economic profit and normal profit. Economic profits are so high that they generate positive operating cash flows to drive expansion of the activity and also attracts funding by debt and equity. These firms have pricing power. For businesses generating economic profits, it would follow that they would be able to pass along tax increases. So even if they were writing big checks to the tax authority, it could be said that they "paid" little or none of the tax - rather they just passed it on to their customers. (Remember that the final customer is people.)
Normal profits are profits that are sufficient to maintain the assets of production in place but not sufficient to grow or attract more funding. These firms would not have pricing power. Tax increases may or may not be passed on to the customer. Whether companies can pass on the tax to people will depend on E.
Elasticity of demand (including substitutions) will largely determine who pays taxes. We say that demand is perfectly inelastic when demand does not change with changes in price. The other extreme would be perfectly elastic, meaning that no change in price is possible without losing out on all sales. So we can say that when demand is inelastic that firms will be able to pass along most of taxes to their consumer. In contrast, when demand is elastic very little of the tax can be passed along.
Enough pure theory. In practical terms what does this mean in the US in 2010. The US economy is a mature economy which has few businesses (especially so when considered as a percentage of GDP) that would be producing economic profits. The vast majority, produce normal profits. In a recession, profits are squeezed putting even more firms in the normal profit range. Why? Because there is no need to expand productive capacity - in fact, we cannot even utilize the capacity that we have already created. So capacity can be allowed to shrink.
If the government increases taxes on corporations in a recession it is reasonable to expect a greater share to fall on the firm. Of course, the firm will take steps to transfer that cost whenever possible. When pricing will not allow it to be transferred to the customer, then firms will find other ways to reduce costs. Cut staff, cut pay rates, offshore etc. etc.
So, is the tax burden on corporations too high in the US? You decide. I think it is. I think that in the end taxes are paid by the people and that collecting it through firms is not ideal.
In fact, for those who favor delevering, switching to a sales tax on all consumption would be effective at reducing consumption, of course at the higher levels that reduce consumption it would also increase unemployment.
ij
BTW - my comments were not intended as a slight to any who engaged this topic - each of whom I regard highly.
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