Posted by: Dan Beucke on December 7, 2011 at 1:20 PM
As the election cycle turns up the heat on the wealth debate, look for companies to argue that any corporate tax hike will be a vote against U.S. job creation. As the Bloomberg Government chart here shows, corporate profits as of last year had recovered from the recession, but corporate tax payments had not. There are two reasons: 1) Companies got a break three years ago on depreciation for spending on factories and equipment. That’s due to expire next year. 2) Much of the post-recession expansion is happening in places like India and China, where multinationals shield their profits from U.S. taxes until they’re repatriated.
Corporate execs say that without further tax breaks, investment will grind to a halt and foreign profits will stay where they are. Critics cite the drop in taxes paid as evidence the companies aren’t paying their fair share — and say that more tax breaks will only make it worse.