Corporate Tax History

About Corporate Tax History

The US corporate income tax was enacted in 1909 as a 1 percent excise tax on corporate income. The tax was upheld by the Supreme Court in Flint v Stone Tracy Co. The corporate tax rate peaked at 52.8 percent during World War II. The rate was reduced by the Reagan tax cuts to 34 percent and by the Tax Reform Act of 1986 to 34 percent. The Trump tax cuts of 2017 reduced the corporate rate from 35 percent to 21 percent. The corporate tax raises approximately 400 billion annually, a significant decline as a share of federal revenue. Corporate tax avoidance through offshore subsidiaries and transfer pricing has reduced effective rates well below the statutory rate.