Taxes

The New York Times
May 25th, 2012
David Kosienciewski http://www.nytimes.com/2011/05/03/business/economy/03rates.html

Summary: U.S is quickly reaching world's number one for having the highest corporate taxes. Second only to Japan, the corporate tax in U.S is at a whopping 35% and thus have caused many corporations to argue for a lower tax. However, despite the high tax rate, many companies have found loopholes that allows them to pay significantly less. For instance, Honeywell for the past year, was found to have only paid 15% of its total revenue.

 Connection: Corporate taxes are a critical component for supplying U.S' federal budget. However, in recent years, the government has plummeted into even greater dept. Its culprit is perhaps the corporations that hire specialists that help them to find loopholes that significantly reduces the amount they have to pay. As shown by the companies that are paying much less, the loopholes must be eliminated in order for the government to suffer less losses. However, the fact that so much companies are seeking loopholes show that the system must be reconfigured to make U.S corporations an equal playing field with companies of other countries, which are paying significantly less in taxes.

  Reflection: As Warren Buffet points out, despite being one of the richest persons in the world, he pays less taxes than the average middle class salaryman. The reason for his ability to pay such low taxes-loopholes in the tax system- are exactly what corporates are employing to pay less. Thus, the fact that the rich are paying such low taxes should be a signal that the current tax system must be revised.