Yes, We Still Have the World’s Highest Corporate-Tax RatePosted: April 3, 2014
…And Paul Ryan is Still Right To Fix It
I selected this article not because of the Paul Ryan budget, but because it has this chart (see below) produced by Veronique de Rugy for the Mercatus Center at George Mason University, that reveals which countries pay what in corporate taxes. We knew the U.S. had among the highest, but like most, I didn’t know the U.S. has the #1 highest. And right behind us are France, Belgium, and Mexico.
I didn’t know that Canada, Iceland, and Switzerland have the lowest. I suspect those countries have fewer rigged policies and armored truck-sized loopholes (managed by corrupt legislators dispensing favors and punishments) and probably enjoy better tax revenues, too, as corporations have far less motive to either move their operations somewhere else, or try to shelter their profits from punitive taxation. Capitol tends to flee high tax regions, and seek lower tax regions. Are Iceland and Canada radical ‘anti-tax’ Tea Party countries? Hardly. The best reason to have an abnormally high corporate tax rate is to insure opportunities for graft and corruption. If a corporation wants tax relief, well, it just needs to know which campaigns to contribute money to.
Veronique de Rugy writes: Chairman Paul Ryan put out the blueprint for his FY2015 budget on Tuesday. I will have more to say about it in the next few days, but first I’ll focus on one idea in his budget: reforming our tax system and, specifically, reducing the U.S. corporate-tax rate from 35 to 25 percent and shifting from a worldwide tax system to a territorial system. These are very good policy proposals.
The extremes of that chart, reflecting 2013 rates, haven’t changed since 2011: National statutory corporate-tax rates among the 34 members of the OECD range from 8.5 percent in Switzerland to 35 percent in the United States.
Despite having the highest national statutory rate, the United States raises less revenue from its corporate tax than the other members of the OECD on average. In fact, the federal corporate-income tax raised just (roughly) 10 percent of total federal tax revenues in 2013.
To make matters worse, yesterday marked a sad anniversary: the second year in a row where the U.S. not only has the highest statutory rate but also has the highest combined rate (39.2 percent) when both the federal and average state rates are added. Japan used to hold the record for combined rates (39.8 percent), until it lowered its combined rate to 36.8 percent in April 2012.
Adding insult to injury: The United States taxes corporations on a worldwide basis, meaning profits made by an American-owned computer plant are subject to American taxes whether the plant is located in Lubbock or Limerick. By contrast, most wealthy countries don’t tax foreign business income — about half of OECD nations have “territorial” systems that tax firms only on their domestic income, a fact that Chairman Ryan highlights in his budget…(read more)
Source: National Review Online
- The United States’ Corporate Tax Reform Problem (pinetreeconomics.wordpress.com)
- Study: The US really does have the highest corporate tax rate, loopholes and all (aei-ideas.org)
- Tax Foundation: U.S. Corporate Effective Tax Rate Is Among Highest in World (taxprof.typepad.com)
- Continued Sky-High US Corporate Tax Rates Encourage Outsourcing (youviewed.com)
- France’s Weak Economic Performance: Sick of Taxation? (wallstreetpit.com)
- Debunking Krugman’s European Austerity Narrative (danieljmitchell.wordpress.com)
- CRS: Corporate Tax Rate Could Drop to 29.4% in Revenue-Neutral Tax Reform (taxprof.typepad.com)
- Veronique de Rugy: Can the Budget Ever Be Cut? (reason.com)
- Bill Nelson pitches corporate income tax reform (miamiherald.typepad.com)
- The Leftist Myth of America’s Low Corporate Tax Rate (iowntheworld.com)