Government can have a big impact, often for the worse. So a lot of business owners very likely rejoiced on news that Donald Trump's tax plan would reportedly cut the top corporate tax rate to 15 percent, down from the current 35 percent.
Don't get too excited because chances are good that this won't help you at all.
Many startups are run as sole proprietorships or even partnerships. They aren't subject to corporate taxes because everything is attributed directly to the owner or owners. If you don't pay corporate taxes in the first place, top limits won't matter.
But say your startup is a registered corporation. The chance that this will make much difference is still small, even though the U.S. has one of the highest top corporate tax rates in the world. (Only the United Arab Emirates and Puerto Rico have higher rates.)
For context, the average top corporate tax rate in the world is 22.5 percent. If you weight the results by country GDPs (more developed countries tend to charge more), the rate is 29 percent.
But the top rate is just a number. The question is what corporations actually pay. What really counts are effective tax rates, or the percentage of their income that corporations spend on taxes after deductions and allowable credits. When it comes to effective tax rates, companies in the U.S. do far better than you might think.
According to a U.S. Government Accountability Office study looking at the years 2006 through 2012, corporations on average paid about 14 percent of the pretax net income reported in financial statements.
That's not the end of the craziness. In each of those years, at least two-thirds of all active corporations reported having zero federal tax liability after applying available tax credits and using whatever strategies were open to them under U.S. law. And while the period of time includes the major years of the Great Recession -- many losses, if you remember -- it also started before and continues after with no change.
Is the issue one of size? Maybe all the companies paying no federal taxes are small. Not a chance. Among "large" corporations -- ones with at least $10 million in assets -- more than 42 percent paid no federal income tax after credits. For all the crying about corporate taxes, there are a lot of companies for which that is only a theoretical problem.
If your company is one that is getting nicked more rather than less, perhaps what you need isn't a new government policy but a better accountant. It seems to work for a whole lot of other entrepreneurs.