How Much do Corporate Taxes Contribute to an Economy?

Key takeaways

• Across OECD nations, corporate income taxes account for roughly 3.5% of GDP (median).
• The U.S. has among the lowest % shares in this ranking, with corporate taxes accounting for 2.1% of GDP. Given its massive economy, however, this still equates to roughly $575 billion.

Why the U.S. collects less in corporate taxes

Corporate taxes account for a relatively low share of America's GDP. Here are three reasons why:

• Pass-through entities (e.g. LLCs, partnerships, sole proprietorships) are taxed at the individual income level
• U.S. multinationals often shift profits to low-tax jurisdictions (e.g. Apple has many subsidiaries incorporated in Ireland)
• Companies can take advantage of accelerated depreciation rules and other accounting strategies to reduce their effective tax rate