Tax Rate Before and After Allowed Credits

The graph below was prepared using Google’s chart tool.

This horizontal bar graph shows the 2008 corporate tax rate before and after corporations apply tax credits to their returns.

The data used for the rates are from the Internal Revenue Service’s publication: 2008 Statistics of Income – Corporation Income Tax Returns. This publication can be reviewed by clicking here (PDF file).

To obtain the two rates, the total income reported on all form 1120 returns filed for 2008 was divided into the total income tax before credits and also into the total income tax after credits, reported on the returns.

The rates shown in the graphs indicate, it seems to me, just how much tax credits can reduce taxes paid by companies. Tax credits can be an important way to reduce company tax expenditures.