One point of contention in the North Carolina tax reform debate has been the fate of one particular tax expenditure—the uncapped sales tax refund for nonprofits. The refund applies to "sales of taxable tangible personal...
- Tax Foundation Launches CompeteUSA Campaign to Highlight "Real...
Tax Foundation Launches CompeteUSA Campaign to Highlight "Real-Wallet" Impact of High Business Taxes on U.S. Jobs and Wages
Campaign Follows OECD Reports Showing U.S. Competitiveness in Decline and that High Business Taxes are Single Most Harmful to GDP Growth
Washington, DC, August 19, 2008 - With the United States facing a "quadruple threat" of negative economic indicators—a stock market in decline, a housing market in decline, seven months of increasing unemployment, and high gas and food prices—and with a public concerned that the country is trending toward a recession, the Washington, DC-based Tax Foundation today launched its CompeteUSA campaign to raise the public's awareness of America's high business tax rates and how those taxes have a "real-wallet" impact on our competitiveness, wages, and living standards.
As part of this look at the "real-wallet" impact of business taxes, the CompeteUSA campaign will also talk about how the American worker shoulders a disproportionate amount of the corporate tax, and the fact that the poorest 20 percent of households pay more in corporate income taxes each year than they pay in individual income taxes. In fact, corporate taxes were 6.3 percent of low-income households' tax bills last year compared to just 4 percent for individual income taxes.
CompeteUSA's first project is a brand new website located at http://www.taxfoundation.org/competeusa/ that went live today, and upcoming activities will include a national cable television ad buy, web advertising, new Tax Foundation studies on economic competitiveness, and op-eds from national economic leaders highlighting the impact of high business taxes on the American worker.
The CompeteUSA campaign launch comes on the heels of new data released by the Paris-based Organisation for Economic Co-Operation and Development (OECD) showing that the United States has the second-highest corporate income tax rate in the industrialized world, that for the 17th consecutive year the average rate of corporate taxes in countries other than the U.S. fell while our corporate tax rate stayed the same, and a new OECD study that finds that corporate taxes are the single most harmful tax to GDP growth—more so than even personal income taxes or consumption taxes.
The U.S.' high corporate tax rates were also the focus of an editorial in the Wall Street Journal last Friday entitled "America the Uncompetitive," which pointed out that "every month that goes by without tax reform, America is a relatively less attractive place to do business."
"20 years ago, the U.S. led the world in cutting the corporate tax rate to make our economy more conducive to job creation," noted Tax Foundation President Scott Hodge at the CompeteUSA kickoff. "Since then, almost every other industrialized country has cut its corporate tax while the United States has stood still, and as a result, the U.S. corporate tax rate is now 50% higher than the OECD average."
"The Chinese are not only beating us in the gold medal count, but also in the race to lower their corporate tax rate," Hodge concluded. "The wages and living standards of American workers are threatened as long as our business tax system remains out of lines with the rest of the world average, and that will only change if we start cheering on our country's economic competitiveness with the same passion that we cheer on our country's athletic competitiveness."
Seven statistics about the corporate tax that might surprise you:
- The combined federal and state corporate tax rate in the U.S. currently stands at 39.3% (the second-highest among industrialized countries), while the OECD average tax rate has fallen to 26.6%.
- Last year, 27 countries cut their business taxes to make their economies more competitive and attractive to investment. This year, more countries—including Canada, Germany, New Zealand, Spain, the United Kingdom, Italy, and Switzerland—all cut their corporate taxes as well.
- China has recognized the significance of cutting corporate tax rates and has reduced their top standard corporate tax rate from 33% to 25% just this year.
- According to a recent Tax Foundation study, the federal corporate income tax alone collected $370 billion in 2007. That's an average household burden of $3,190 per year—more than the average household spends on restaurant food, gasoline or home electricity in a year.
- A 2006 working paper by a staff economist with the non-partisan Congressional Budget Office found that 70 percent of corporate tax burdens fall on domestic workers through lower real wages, while the remaining 30 percent fall on company shareholders.
- As a group, the poorest 20 percent of households pay more in corporate income taxes each year than they pay in individual income taxes to the IRS each April. Households earning under $23,700 in 2004 paid on average $271 in corporate income taxes, compared to just $171 in individual income taxes.
- As a share of their total tax burden, corporate taxes were 6.3 percent of low-income households' tax bills compared to just 4 percent for individual income taxes.
Scott Hodge is president of the Tax Foundation, a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937. He leads the foundation's new CompeteUSA campaign for business tax reform along with Robert Carroll, Ph.D., Vice President for Economic Policy at the foundation and recently Deputy Assistant Secretary for Tax Analysis at the Treasury Department.
To set up an interview to discuss the CompeteUSA campaign, American economic global competitiveness, or the tax plans of any of the presidential candidates, log on to http://www.taxfoundation.org/competeusa/ or call Matt Moon at (202) 464-5102.
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