Before-Tax Profits Required to Pay $1 to Investors Across Sectors: Industry-specific tax breaks incentivize investment in specific industries.
May 3, 2012
The tax code assigns different tax rates to different activities by incentivizing some activities while penalizing others. This chart shows how different effective corporate tax rates translate into pretax profitability. Companies in high-tax industries, such as steel, trucking, or utilities, must earn more than $1.40 in before-tax profits, on average, to return $1 to investors. On the other hand, companies in low-tax industries, such as biotechnology and Internet services and software, need to earn less than $1.20.