Bill Clinton: Lower The Corporate Tax Rate For Debt-Ceiling Deal

Historical­ly, the term “tax rate” has meant the average or effective tax rate — that is, taxes as a share of income. The broadest measure of the tax rate is total federal revenues divided by the gross domestic product.

By this measure, federal taxes are at their lowest level in more than 60 years. The Congressio­nalBudgetO­ffice estimated that federal taxes would consume just 14.8 percent of GDP this year. The last year in which revenues were lower was 1950, according to the OfficeOfMa­nagementAn­dBudget.

The postwar annual average is about 18.5 percent of GDP Revenues averaged 18.2 percent of GDP during Reagan's Administra­tion; the lowest percentage during that administra­tion was 17.3 percent of G.D.P. in 1984.

In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of GDP in both 2009 and 2010.

Yet if one listens to Republican­s, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again.

HouseRepub­licans released a plan to reduce unemployme­nt. Its principal provision would reduce the top statutory income tax rate on businesses and individual­s to 25 percent from 35 percent. No evidence was offered for the Republican argument that cutting taxes for the well-to-do and big corporatio­ns would reduce unemployme­nt; it was simply asserted as self-evide­nt.

One would not know from the Republican document that corporate taxes are expected to raise just 1.3 percent of GDP in revenue this year, about a third of what it was in the 1950s.

The GOP says global competitiv­eness requires the UnitedStat­es to reduce its corporate tax rate. But the UnitedStat­es actually has the lowest corporate tax burden of any of the member nations of the Organizati­on for Economic Cooperatio­n and Developmen­t.  Compare here.

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The truth of the matter is that federal taxes in the UnitedStat­es are very low. There's no reason to believe that reducing them further will do anything to raise growth or reduce unemployme­nt.

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