President Obama’s fiscal year 2015 budget proposes to increase taxes on individuals by over $820 billion and on businesses by about $500 billion, for a total of over $1.3 trillion in new taxes over the next ten years....
- U.S. Corporate Tax Rate Highest in OECD, Says New Study
U.S. Corporate Tax Rate Highest in OECD, Says New Study
For immediate release.Media contact: William Ahern (202) 464-5101.
Washington, D.C.—The U.S. is lagging behind its major trading partners in a worldwide trend toward lower corporate tax rates, according to a new study from the Tax Foundation.
“One of the ironies of tax policy during the Bush presidency is that five years of tax-cutting legislation have left the corporate income tax rate unchanged,” said staff attorney Chris Atkins, co-author of the new report with president Scott A. Hodge.
Every nation in the Organization for Economic Cooperation and Development (OECD) taxes corporate income, but most do not have a second layer of corporate income taxes at the state level as the U.S. does. As a result, tax writers at the federal level in the U.S. need to take that into account when deliberating how high the federal corporate income tax rate should be.
“The U.S. now has the highest combined statutory corporate income tax rate among OECD countries,” said Tax Foundation President Scott A. Hodge. “The U.S. will not attract new business and job creation if its corporate income tax is significantly higher than in comparable nations. As the U.S. contemplates fundamental tax reform, one of the major goals should be a lower corporate income tax rate.”
The President’s Advisory Panel on Federal Tax Reform has suggested modest cuts in the federal corporate income tax rate in its final report released November 1. The panel suggested a 31.5 percent top rate in one plan and a 30 percent top rate in an alternative plan. Both plans would improve the U.S. worldwide ranking, but the U.S. would still be taxing corporate income at a rate well above the OECD average.
“Lawmakers should consider reducing the federal rate to 25 percent which, when coupled with state corporate income taxes, would almost bring the U.S. rate down to the OECD average of 29.2 percent,” said Atkins.
The report is titled, “The U.S. Corporate Income Tax System: Once a World Leader, Now A Millstone Around the Neck of American Business,” Tax Foundation Special Report No. 136, by Chris Atkins and Scott A. Hodge. The full study is available online at http://www.taxfoundation.org/legacy/show/1175.html.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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