Effective Average U.S. Corporation Income Tax Rates

This study computes effective average corporation income tax rates for IRS "minor industries" in mining and manufacturing for the 1963 tax year. Effective tax rates take into consideration the tax reductions that result from "special tax provisions" — those tax laws and rules which cause the actual tax structure to deviate from a simple basic corporation income tax structure. The average effective tax rate for 110 industries for 1963 is 39 per cent. The deviation between this average and 52 per cent (the nominal rate on income in excess of $25,000 in 1963) provides evidence of the pervasiveness of special tax provisions and allowances. The standard deviation is about 7 percentage points, indicating a nonuniform effect of special tax treatment on various industries. Several applications of these data are suggested.