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Monday, September 24, 2012

So... How much do companies pay in taxes?

Now that we know how much Mr. Obama and Mr. Romney pay in taxes, one should ask how much do firms pay...

In textbooks, it is always assumed a flat 40% tax rate.

It turns out that this figure is far from realistic. The following chart from FRED, Federal Reserve Bank of Saint Louis shows that the number is much more likely to be in the late teens (17 to be exact).

The picture is not much better on the personal side....Textbooks say it is 35% for top earners and 10% at the bottom.  Look at the following chart prepared using IRS data for 2009, on taxes paid by citizens

Who (besides me off course) is paying taxes?

Use this information wisely.


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