Hovde Taxes The Truth

I saw GOP Senate candidate Eric Hovde's TV ad during Tuesday's World Series programming that claims American corporations are penalized by the highest corporate tax rate in the world - - and I thought, c'mon:

I know there's more to the story, once you get past his clever wording.

Yes, the US corporate rate is the world's highest, but actual revenue collected by the tax, as a percentage of a country's GDP, drops the US to nearly dead last, as this financial reporting explains:

NEW YORK (CNNMoney) -- U.S. corporations pay one of the highest tax rates in the world. There's little debate about that...

In fact, the United States collects less corporate tax relative to the overall economy than almost any other country in the world.

And that's a more objective measure of tax burden. Different accounting rules around the world means what's counted as income in one country isn't counted in another -- that makes comparisons of tax rates misleading.

U.S. corporate tax collections totaled only 1.7% of GDP in 2009, the most recent year for which complete data is available, according to the Organization for Economic Cooperation and Development.

On that measure, the United States had the third lowest corporate tax burden, behind France and Germany. The worldwide average was 2.8%.

One reason U.S. corporate tax collections are low is that many U.S. small business owners file personal income tax returns, said Eric Toder, co-director of the nonpartisan Tax Policy Center.

In other countries, many small businesses pay both corporate and personal income tax. So a business owner in a country with a lower corporate tax rate could end up paying more than his U.S. counterpart.

U.S. businesses have another edge over countries with lower tax rates: They don't pay a Value Added Tax or VAT, a type of sales tax.

All other developed nations raise a significant part of their tax revenue through VATs, but it is not included in the comparisons of corporate tax collections.