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1 Corporate Tax Burdens [1] (1987)

handle is hein.taxfoundation/crpx0001 and id is 1 raw text is: November 1, 1987 Corporate Tax Burdens With the approach of the 1988 Presidential election, we can ex- pect some familiar refrains about taxes and the corporate sector. We will hear again about the great corporate giveaway of 1981 and how so many large profitable corporations are get- ting away with little or no in- come tax liability. Stale as these themes are, they have been re- peated so often they take on a life of their own despite convincing evidence to the contrary. First, there was a significant corporate tax cut enacted under the Economic Recovery Tax Act of 1981 (ERTA). If it had been al- lowed to take effect fully, it would have substantially re- duced overall corporate income tax liabilities in the 1980s. But that didn't happen. Instead there were contravening major tax bills starting with TEFRA in 1982 and culminating with the Tax Reform Act of 1986 which oblit- erated the capital recovery and business tax relief of 1981 and, instead, piled on significant net increases in corporate tax liabili- ties after fiscal 1986. This is shown in Table I comparing the effect of major enacted legisla- tion in the 1981-1986 period on individual and corporate in- come taxes currently and pro- jected through 1990. Individuals did experience marked income tax reductions for the period but the corporate sector was another story. Corporate Share of Income Taxes What about the corporate share of the income tax bur- den? Over the long term it has shrunk as a share of total income taxes, but with some special fac- tors affecting the trend. As Table 1 indicates, there was a precipitous dropoff in cor- porate income tax receipts, both absolutely and as a percentage of total income taxes in fiscal 1982 and 1983. Corporate receipts fluctuate more widely than indi- Table II Federal Corporate IncomeTax Receipts Selected Fiscal Years, 1950-1987 % of Total Income Tax Year tBillions Receipts 1950 10.4 39.9 1955 17.9 38.3 1960 21.5 34.6 1965 25.5 34.3 1970 32.8 26.6 1971 26.8 23.7 1972 32.2 25.3 1973 36.2 25.9 1974 38.6 24.5 1975 40.6 24.9 1976 41.4 23.9 1977 54.9 25.8 1978 60.0 24.9 1979 65.7 23.2 1980 64.6 20.9 1981 61.1 17.6 1982 49.2 14.2 1983 37.0 11.4 1984 56.9 16.1 1985 61.3 15.5 1986 63.1 15.3 1987 83.9 17.6 Source: Economic Reports of The President and U.S. Treasury Release, October 28, 1987. Tax Foundation, One Thomas Circle, N.W., Suite 500, Washington, DC 20005 202-822-9050 Table I Effect of Major Legislation, Enacted 1981-1986, on Individual and Corporate Income Tax Receipts, Fiscal Years 1986-1990 ($BIllions) 19M 1987 j 19 89 1986-9 Individual Income Taxes -134.4 -157.0 -186.2 -216.9 -238.6 -933.2 Corporate Income Taxes -14.8 +18.5 +19.7 +20.6 +24.2 +68.3 Source: Budget of the U.S. Government, FY 1988

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