With cash-strapped governments looking for every cent of tax revenue they can find, the tax practices of multinational corporations such as Apple, Google, Amazon, Facebook and Starbucks have come under close scrutiny in both the U.S. and Europe. On Tuesday, Apple chief executive Tim Cook defended his company’s tax management before the U.S. Senate Permanent Subcommittee on Investigations. The subcommittee published a damning report on Apple’s non-U.S. tax arrangements, accusing the company of “purposefully depriving the American people of revenue”; Apple maintains it has done nothing illegal in any jurisdiction.
While the issue underlines the complexity of America’s labyrinthine tax code, it also touches a populist nerve. The idea that big companies aren’t paying their way resonates with the great mass of middle-class Americans who have seen little or no recovery in their incomes in recent years. Yet taxes on corporate income have been making up a smaller share of the U.S. federal government’s revenues since the end of World War II. As the chart above shows, the proportion hit a low of 6.2% in 1983, having descended from a peak of 39.8% in 1943. Since the early 1980s, the share has mostly stayed within a band straddling 10%. Over the same period, the share accounted for by individual income tax has stayed with a band of 43%–49%.
The chart below shows, by year, the number of dollars paid in individual income tax for every $1 of corporate income tax paid.