…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. Read the rest of this entry »