- Days left
apple taxes
AP
By JAMES O' TOOLE

U.S. companies face the highest official corporate tax rate in the world. But there's a big difference between the rates set out by law and the cash that's actually collected.

Large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010, the Government Accountability Office said Monday.

The federal corporate tax rate stands at 35%, and jumps to 39.2% when state rates are taken into account. But thanks to things like tax credits, exemptions and, the actual tax burden of American companies is much lower.

In a report commissioned by Senators Carl Levin (D-Mich.) and Tom Coburn (R.-Okla.), the GAO looked at taxes paid by profitable U.S. corporations with at least $10 million in assets.

Even when foreign, state and local taxes were taken into account, the companies paid only 16.9% of their worldwide income in taxes in 2010.

Coburn said in a statement that the report "underscores the need for comprehensive tax reform."

"An individual's or corporation's tax rate shouldn't be dependent on their ability to hire a tax lobbyist," Coburn said. "It's especially wrong to ask families who are struggling to make ends meet to subsidize special breaks for corporations."

Republicans as well as President Obama have called for a lower statutory corporate rate along with the closing of loopholes. The prospects for such reform appear remote for now, given the fractious nature of the current Congress.

The GAO's calculation for effective corporate tax rates is lower than a number of previous estimates. That's in part because the office excluded unprofitable firms, which pay little or no taxes, from its analysis.

Including those firms' losses would reduce the total net income from which the average tax rate is calculated, and would not "accurately represent the tax rate on the profitable corporations that actually pay the tax," the GAO said.

The GAO used figures on taxes paid from actual IRS returns, which it noted were "on the whole, lower than the tax liabilities reported in the corporate financial statements."

U.S. corporate tax collection totaled 2.6% of GDP in 2011, according to the Organization for Economic Cooperation and Development. That was the eleventh lowest in a ranking of 27 wealthy nations.

The Senate's Permanent Subcommittee on Investigations has hauled several corporate executives to Capitol Hill over the past year for testimony on their tax practices.

A report released by the subcommittee last month charged that Apple (AAPL) used a complicated system of international subsidiaries and cost-shifting strategies to avoid paying taxes on some $74 billion in income from 2009 to 2012.

In September, the subcommittee heard from Microsoft (MSFT) and Hewlett-Packard (HPQ), whom Levin called "case studies of how U.S. multinational corporations... exploit the weaknesses in tax and accounting rules and lax enforcement."

A subcommittee report at the time alleged that Microsoft had saved nearly $7 billion off its U.S. tax bill since 2009 by using loopholes to shift profits offshore. H-P, the report said, avoided paying taxes through a series of loans that shifted billions of dollars between two offshore subsidiaries.

More from CNNMoney:
Student Loan Horror Stories
11 Disappearing Car Features
The Cayenne Diesel is a Greener SUV



Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Getting out of debt

Everyone hates debt. Get out of it.

View Course »

TurboTax Articles

What is IRS Form 8824: Like-Kind Exchange

Ordinarily, when you sell something for more than what you paid to get it, you have a capital gain; when you sell it for less than what you paid, you have a capital loss. Both can affect your taxes. But if you immediately buy a similar property to replace the one you sold, the tax code calls that a "like-kind exchange," and it lets you delay some or all of the tax effects. The Internal Revenue Service (IRS) uses Form 8824 for like-kind exchanges.

What are ABLE Accounts? Tax Benefits Explained

Achieving a Better Life Experience (ABLE) accounts allow the families of disabled young people to set aside money for their care in a way that earns special tax benefits. ABLE accounts work much like the so-called 529 accounts that families can use to save money for education; in fact, an ABLE account is really a special kind of 529.

What is IRS Form 8829: Expenses for Business Use of Your Home

One of the many benefits of working at home is that you can deduct legitimate expenses from your taxes. The downside is that since home office tax deductions are so easily abused, the Internal Revenue Service (IRS) tends to scrutinize them more closely than other parts of your tax return. However, if you are able to substantiate your home office deductions, you shouldn't be afraid to claim them. IRS Form 8829 helps you determine what you can and cannot claim.

What is IRS Form 8859: Carryforward of D.C. First-Time Homebuyer Credit

Form 8859 is a tax form that will never be used by the majority of taxpayers. However, if you live in the District of Columbia (D.C.), it could be the key to saving thousands of dollars on your taxes. While many first-time home purchasers in D.C. are entitled to a federal tax credit, Form 8859 calculates the amount of carry-forward credit you can use in future years, not the amount of your initial tax credit.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
d1ncharge1

Corporate taxes is a misnomer. It's just plain tax, for everybody to pay. They try to dress it for the ignorant people out there, as if it is a tax on the greedy faceless corporations, this is how they can raise taxes and not look bad doing it. If apple had to pay 20% more in taxes, customers would pay for it through prices. This is a tax on pretty much all Americans since we will likely buy at least one thing this year from one corp. or another.

July 23 2013 at 8:54 AM Report abuse rate up rate down Reply