As the debate over the budget begins to heat up, taxes will become the major issue. According to President Obama, raising taxes on high earners is a better solution than cutting federal programs for the poor. The budget talks will likely lead to many discussions about reforming the tax code
One of the President’s proposals to balance the federal budget is to raise the corporate tax rate, which is 35 percent. Currently the US has the second highest tax rate for businesses, trailing behind Japan, their corporate tax rate is 39.5 percent.
Even though the tax rate for businesses is considered high many large corporations pay a less than the 35 percent because of various subsidies and deductions. In fact General Electric received a federal refund in 2010. According to a report in The New York Times each different category of corporations has paid much lower amounts in income tax on profits than the 35 percent rate.
A study released by Kevin S Markle of Dartmouth and Douglas A Shackelford of University of North Carolina showed the actual rate of taxes paid by different sectors of the business world. The study showed that retailers pay 31 percent in income taxes; the construction industry paid 30 percent while manufacturers shelled out 26 percent. Companies that offer financial services paid 20 percent in income taxes, but the mining industry paid the lowest at 9 percent.
Paying the yearly income tax can be difficult for anyone whether they are a large business or a middle- class individual. It is easy to forget at the beginning of each year a person will have to pay their taxes, if they run a small business the tax bill may be hard to come up with and a tax attorney may become crucial to negotiate with the feds over the penalties levied on unpaid tax balances. Tax lawyers work with their clients to reach satisfactory agreements and stop the freezing of assets.
