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
