Senator Elizabeth Warren, a Democrat from Massachusetts, speaks at the American Job Creation and Infrastructure Forum in Washington, D.C., U.S., on Thursday, Oct. 8, 2015.
Photograph by Pete Marovich—Bloomberg via Getty Images
By Chris Matthews
November 18, 2015

Elizabeth Warren may not be running for president, but she has the star power to shape the national debate on economic policy anyway, and she plans to use it.

In a speech Wednesday at the National Press Club, Warren struck back against the narrative of the American corporate tax regime that’s been put forward in the Republican primary race, where it is often said that the United States has the highest corporate tax rate in the world.

“The lobbyists have a pretty good elevator pitch,” Warren said. “And it goes like this: U.S. corporations are paying too much taxes. The top corporate tax rate is 35%, which is much higher than the rest of the world, and it’s forcing corporations to flee abroad. The solution is to slash corporate tax rates across the board.”

The truth is much more complicated than that. The U.S. corporate tax code is extremely complex and filled with tax breaks that save companies $154.4 billion per year, so no two corporations pay the exact same rate. Estimates of the “effective” corporate tax rate range widely, but a Congressional Research Service study from January 2014 found that for U.S.-based corporations the “average effective rate is about the same” as corporations in other OECD countries.

Warren argues that the government should ask companies to pay more in taxes, not less, citing the trend that corporate tax revenue makes up an historically small share of total tax receipts: just 9%, versus close to 33% in 1950. This chart from Brookings’ Tax Policy Center shows how corporate tax revenue has evolved over time:

Warren argues that other rich countries are starting to crack down on what she calls “tax dodging,” citing new laws like Britain’s “Google tax” as an example. The Republican Party, meanwhile, wants to needlessly lessen the tax burden on corporations, according to the Massachusetts senator.

At a time when populist rhetoric against large, powerful corporations is common speech fodder for elected officials of both major parties, the above chart could be seen as damning evidence for anyone who wants to lower the amount of revenue raised from Corporate America. At the same time, one should consider how government spending has evolved over time. In 1950, the biggest ticket in the government’s budget was military spending, whereas today it’s Social Security and Medicare, which are supposed to be insurance programs that individual workers pay for throughout their working lives before receiving the accrued benefits after retirement.

In other words, corporations foot a smaller share of federal tax expenditures, but they also don’t directly benefit from as much federal spending as they 65 years ago, either.

Warren’s speech makes clear that the left is not going to roll over in the coming fight on corporate tax reform. Given the complicated nature of the U.S. tax code, how reform shakes out will have a lot to do with the rhetoric behind the plans. And few communicators are more effective at arguing that corporations need to foot a larger share of the government’s bills than Elizabeth Warren.

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