Although some people think that the U.S. corporate income tax rate puts the U.S. at a competitive disadvantage, the reality doesn’t support that theory. A recent study by Citizens for Tax Justice shows that nearly 40% of the U.S.-based Fortune 500 companies doing business abroad paid zero U.S. income taxes. Two-thirds of the companies paid higher corporate tax rates to foreign governments where they operate (27.3 percent) than they paid to the U.S. on their domestic profits (15.8 percent). 

CFO magazine reports that the effective foreign tax rate on the 125 companies with foreign pretax profits was 2.7 percentage points higher than their effective tax rate in the U.S. 

While corporate lobbyists are continually insisting that the U.S. corporate tax rate is too high and not competitive with the rest of the world, the claim is simply untrue. 

The Citizens for Tax Justice and The Institute on Taxation and Economic Policy, both non-partisan research and advocacy groups, are urging Congress to make tax reforms, including repealing a federal tax rule allowing U.S. corporations to defer their U.S. taxes on their offshore earnings. If the rule is repealed, there would no longer be an incentive to move profits to offshore tax havens or send jobs to lower-tax countries. 

Twenty-six companies, including Boeing, General Electric, and Verizon, paid no federal income tax over the five-year period that was studied. Wells Fargo, AT&T, IBM, General Electric and Verizon cumulatively received over $77 billion in tax breaks during that time.