AemJeff: The term "non-sequitur" fairly well describes your answer. Try again.

So here is my question: Is there any relationship between corporate tax rates and executive compensation? To ask it another way. If corporate tax rates were a lot lower, say zero, would corporations be less or more likely to shower the executives with extravagant pay? My personal feeling is that executive compensation in the US is disgraceful.

AemJeff,

An academic lecture on posit-structure ... just what we need.

If you tax something, there will be less of that something produced.

"tax breaks are are an integral part of the tax system here, and when they're factored in the effective corporate tax rate isn't anything like what's indicated in the accompanying chart." .....
Please, don't presume to pronounce for zillions of small businesses in the USA that their 'effective corporate tax rate isn't anything like what's indicated in this chart' ... General Electric doesn't have to pay 35% tax (or 1%, apparently), and maybe your company (if you have one, or is this purely an academic 'truth'?) but the vast majority of corporations in this country pay very close to the rate you see.

People experienced in business, and clear-eyed as a direct consequence of being under a system of profit-enforced discipline, easily understand that 35% is higher than 25% or 15%. These business people also 'get' that if the tax rate is lowered, there will be less time/effort/creativity spent chasing tax breaks, and more time/effort/creativity spent chasing profits, thus creating more profits, more jobs, and - voila - more tax revenue.

Best regards from a 2nd generation business owner of 40+ years.

Of course, actual corporate tax rates are much, much lower, and the percentage of federal revenue that comes from corporate taxes had dropped sharply since WW2:

External Link 

I am NOT arguing this, but the standard argument I hear from lefties is that yes we have high corporate taxes, but corporations don't actually pay them because of 'loopholes'. I'm just curious - although I doubt I'll get an answer because it seems the boards are just a place for commenters to argue - if Veronique could address that point by looking at revenue collected from corporations. It would be great to have stats to back up a comeback argument.

** "Yes -- abolish corporate taxes and "reform" Medicare: can you say 'Democratic-controlled House in 2013'?" **

The policy of the Republican leadership seems to be not to do anything to tick off their own donors or the other party's voting base. However, ticking off Republican voters is fair game.

"The combination of high rates, worldwide taxation, and a competitive global marketplace makes our corporate tax system extremely punishing. It should be abolished."

Veronique, the argument that rates are too high is one thing, but you want to go from high to 0 ("abolished")? Given our budget deficits and the fact that there are only so many high income people to tax, how much do you want to raise taxes on the middle and lower income people? I foresee no way that the math can work. It's going to be hard enough to get sufficient spending cuts to eliminate our huge deficits without major tax increases, much less getting rid of corporate taxes.

Oh, and as one commenter (LKS noted, tax something and get less of it. So if an American company owns a plant overseas, let's stop taxing the overseas profits. That way we can encourage American companies to build more plants overseas. We have too many jobs in the United States right now and should do all we can to encourage more production to go overseas.

Best thing would be to end a whole bunch of special interest corporate tax loopholes, and offset that in revenue neutral fashion with an overall rate decrease. I beleive that approach was taken with both the Simpson/Bowles plan and the Ryan plan. That way we would lower the corporate rate, but with no loss of revenue, with the added benefit of removing the gov control and favoritism associated with the special interest tax breaks, and making the code simpler and fairer.

A good special interest tax deduction repeal to start with is the ethanol subsidy, and all the other special interest "green" tax breaks. If GE benefits from it, it should probably be repealed. I would oppose a corporate rate cut that was not offset with either repeal of tax breaks, or spending cuts. However, I would also oppose cutting the special interest tax breaks without making it revenus neutral with an overall rate cut. The share of spending by the gov must be cut. With our deficit what it is, the days of giving tax cuts that are not offset with spending cuts, or cutting special interest deductions, are over.

Prices are set through competition...companies charge as much as they can. Unless there's perfect competition, prices WILL NOT automatically fall so that prices go down with no corporate tax. That's gibberish. And look at an accounting or economic book, or better yet use common sense to tell you that.

Also companies pass dividends and other profits (by buying back stock) back to their owners. Dividends are preferentially taxed (15% I think) and stock buybacks are tax free. So what you're arguing for ONCE AGAIN, is lower or no taxes on the rich who own stocks. Meanwhile of course you'll couch this in terms of "little guys own stocks too!". Sure, they own 50K in a 401K maybe, rich own 99% of the wealth in this country.

And rich people shouldn't be taxed a penny on their corporate earnings.

I hope republicans run on exactly that platform. "No taxes for the rich who own 99% of the wealth in this country!". That'll be a big seller. That and no abortions and endless foreign wars. Big winners all three.