Friday, March 16, 2012 at 12:38 AM by Tamarine Cornelius
A blog post yesterday by Citizens for Tax Justice (CTJ) noted that the U.S. Treasury Department’s latest monthly statement contains the startling news that Treasury has slashed by 28 percent the amount that it expects to collect in corporate taxes in 2012, from $333 down to $237 billion.
“With such a dramatic revision, one might expect that lagging corporate profits or a sudden economic disruption is to blame. In reality however, corporate tax revenue continues to limp in spite of the fact that corporate profits have rebounded to record highs. If corporate profits are not behind this $96 billion drop in expected corporate tax revenue, then what is?”
CTJ cites two explanations – the practice of multinational corporations to move profits offshore, and corporate tax breaks for accelerated depreciation. It’s important to understand the corporate tax trends and underlying factors before the President and Congress tackle corporate tax reform and potentially pass up an opportunity to use those reforms to reverse the sharp drop in this important but dwindling revenue source.