Question:

Why is it that regular corporations earning up to $250,000 are taxed at a higher rate than corporations that make millions? Also, is the government planning to do anything about this inequality? -Billy Gist, Kenner, La.

Answer:

While it may seem like big corporations are charged less in taxes, that's not exactly the case. In fact, corporations both big and small are subject to the same federal corporate tax rates: 15% on the first $50,000 of taxable income, 25% on taxable income in excess of $50,000 (but not in excess of $75,000), 34% on taxable income in excess of $75,000 (but not in excess of $10 million) and 35% on taxable income in excess of $10 million.

Both large and small businesses also have access to many tax deductions. The problem is that the tax laws are complicated and bigger corporations are often more capable of affording the manpower to wade through them, says Charles A. Wry, Jr., a business attorney in Waltham, Mass. Bigger companies are also more likely to participate in activities that aren’t “economically substantive” — in other words, actions intended only to produce tax benefits — such as corporate tax shelters, he says.

President Obama set forth plans to close several tax loopholes in February’s stimulus bill. More recently, he announced plans to crack down on tax laws that allow the corporations to store money in international tax shelters. Among other things, the president calls for removing tax deductions for companies that send jobs overseas and making it more difficult for companies to hide their foreign subsidiaries for tax purposes through so-called "check the box" rules. (For our story on Obama’s corporate tax fixes, click here.)