Corporate Tax

Past the headlines: Understanding corporate taxes

Every year we see new headlines about seemingly profitable large corporations that do not pay income tax.

But as outrageous the headlines sound, the truth is almost always much more complicated and less shocking.

As individuals, we don’t pay taxes on every dollar we make.

Tax laws allow us to reduce our taxable income through the standard deductions and even the benefits of investing in our retirement, while tax credits further reduce the taxes we owe.

In the same way, Congress grants companies legitimate deductions from their taxable income as well as credits for taxes they owe.

These include credits for investments in research and development as well as deductions for depreciation of physical investments such as machinery or factories.

When companies experience losses or irregular business cycles, Congress also allows them to offset their taxable income to ensure they are taxed based on average profitability.

These policies are important because they help protect employment and job creation, and promote advances that improve our lives and help the economy.

Without these guidelines, we would live in a very different world – one with fewer medical breakthroughs, less life-changing technologies, less convenience, and less investment in clean energy.

These deductions and credits enable companies to invest in the future that will benefit us all.

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