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As the nation frets over slow growth and large budget deficits, much has been made over how much Americas are and should be paying in income tax. President Obama and Democrats have argued that the wealthiest among us are not paying their fair share. They say the spoils of the globalization and the internet revolution have gone almost exclusively to the very wealthy, and that, in times of crisis, more should be asked of those who can afford to give. Those on the right counter that the wealthy pay their fair share and, more, that the top one percent pay a huge percentage of federal income tax receipts.

But there is another source of federal revenues that receives less attention: corporate income taxes. According to the Wall Street Journal’s recent study of Congressional Budget Office numbers, corporations are paying an effective rate of 12.1%, the lowest in at least 40 years. So why are some of the biggest and most powerful entities in our society getting away with paying so little? The story is complicated, but the biggest factor in the recent collapse in corporate tax receipts appears to be a set of tax breaks built into recent stimulus efforts.

In 2010 and 2011, companies were allowed to deduct the full cost of the purchases of new equipment, while normally these costs would be expensed over several years. In 2012, this deduction will go down to 50% and be eliminated altogether thereafter, causing the effective tax rate to return to roughly the 25.6% average effective tax rate corporations paid since the late 1980s, according to CBO forecasts.

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Of course that 25.6% number is still quite a bit lower than the nominal tax rate of 35%, the highest in the world behind only Japan. So why aren’t corporations paying what the law says they should? Certainly, some are. According to Howard Barnet, a tax attorney with Carter Ledyard & Milburn, it all depends on what kind of corporation you are. He says that large, multinational corporations have many more strategies available to them to reduce tax burdens than smaller, domestic firms do. Pile on top of that all the tax goodies that politicians like to lavish on their favorite industries like tech, manufacturing, and real estate and, “it’s a small subset of domestic companies left holding the bag,” Barnet says.

It would seem, then, that whatever your concept of fairness is with regards to personal tax rates, the corporate tax regime in America is blatantly unfair, with some corporations not paying enough and others shouldering too heavy a burden. Our current system, however, will probably not continue much longer. While 2012 will be a year of gridlock in Washington, tax reform will be on the top of the agenda for the President and Congress after the election, with corporate tax rates and loopholes a major target of reform.

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Oddly enough, the best way to make corporations pay their fair share may be to do away with the corporate tax altogether. No matter what Mitt Romney says, corporations aren’t people. Their profits, however, are ultimately distributed to people, whether it be shareholders or employees. It is true that corporate America is currently hoarding cash, but under most circumstances, executives can’t justify such low returns on their capital. If corporate leaders can’t find productive use for their profits, they will distribute that money to shareholders in the form of dividends. And that income can be taxed at whatever rate society deems fair.

Economist and blogger Ed Dolan argues for shifting the burden of income tax from the corporation to its proprietors, saying at the very least that the corporate tax rate should be lowered, its loopholes eliminated, and that capital gains should be taxed as ordinary income. He also suggests that the corporate tax could be eliminated altogether, and replaced with more broad based taxes on energy or consumption. And these tax regimes need not be regressive. Rates could be set in such a way to not place too great a burden on the less wealthy. And as Barnet notes, “As a practical matter we’re going towards [eliminating corporate tax] now. It’s just, sort of, the suckers out there who are paying corporate tax.”

So are we moving to a point where we officially eliminate taxes on corporations? For obvious reasons, this is not politically feasible. Most proposals in Congress involve lowering the nominal corporate rate but at the same time removing loopholes that allow companies to pay well below the nominal rate.

Certainly this is a start. One thing is for sure: The more complicated the tax code, the easier it is for the rich and powerful to game the system and leave the rest of us to foot the bill.