Citing debunked tax myth, President Trump moves to scrap anti-inversion rule

As we at Fair Share have said previously, if we want to base our debate on tax reform on reality and fairness, we need to start with the facts, and correct the record.

President Donald Trump has often cited a myth about our tax code, one which has been disproven: That American companies pay the highest corporate taxes in the world.

That he used this myth as justification for signing an executive order aimed at scrapping a rule that prevented companies from “inverting” -- or renouncing their status as U.S. companies to dodge taxes -- further underscores our point.

The president has said he wants to get rid of corporate tax loopholes and stop companies from offshoring profits and jobs. And yet, his executive action could have the effect of rewarding companies for moving their headquarters overseas to take advantage of tax loopholes.

First let’s start with his assertion that we have the highest corporate tax rate in the world. While the statutory rate is higher than most countries (at 35%, but not actually the highest), the average effective tax rate for U.S. companies is 27.1%, which is below average for other major economies, which average 27.8%.

Bigger companies pay less. Fortune 500 companies paid an average effective federal income tax rate of 21.2%.

Already, many larger companies pay less than their smaller competitors because they have the ability and complexity to use the loopholes in our current system.

Trust me, your barber isn’t looking to invert to Ireland to dodge his taxes, he just pays what he owes.

Facilitating more inversions isn’t reducing taxes on companies, it’s allowing those who most aggressively hide profits offshore to get away with it.

Our president is also calling for a 15% corporate tax rate. But without getting rid of loopholes like the ones that allow inversions, this just means our tax code, which was never the leader in tax percentage will continue to lead in just how much it allows big companies to avoid paying what everyone else does.

If you want to stand up for the little guy, how about closing loopholes?