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We don’t simply have a problem when it comes to the amount of tax collected. We have a huge problem when it comes to the way we collect taxes. Take corporate taxes as an example. We impose taxes at the second highest rate in the rich world (35%), yet the corporate tax code is riddled with incentives, subsidies, exemptions, and loopholes.13 The result is crazy. We give firms a huge disincentive to earn money at home (because our basic tax rate is so high), while giving them huge incentives to play the system. And remember: the United States boasts some of the world’s most innovative and entrepreneurial companies. If we give those guys an incentive to find ways around our tax code, they’ll turn out to be world-beaters. World-beaters like General Electric, for example.14 GE earned $14.2 billion of profit in 2010, of which $5.1 billion was generated in the US. I’m guessing that you earned less than $5 billion that year, but I’m damn sure you had a more painful settlement with the taxman. In 2010, GE’s net corporation tax obligation to the US government was sub-zero. The firm actually derived a net benefit from the government. In the five years to 2010, GE accumulated $26 billion in American profits and booked a net benefit of $4.1 billion from the IRS. That’s completely insane. You don’t, however, need to be GE to outperform in this way. Big Oil can play the same game to almost equal effect. According to a Citizens for Tax Justice report out in 2011, ‘Over the past two years, Exxon Mobil reported $9,910 million in pretax US profits. But it enjoyed so many tax subsidies that its federal income tax bill was only $39 million—a tax rate of only 0.4%.’15
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