If ever U.S. lawmakers need another reminder that our corporate taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. rates are out of step with the rest of the world, the Swedish government announced plans to cut their corporate tax rate in 2009 to 26.5 percent from the current level of 28 percent in order to improve its business climate relative to other European nations.
In the English edition of the Swedish newspaper The Local, Liberal Party (Folkpartiet) leader Jan Björklund justified the rate cuts by saying, "Corporate tax is one of the taxes which large companies really study when they plan to set up business somewhere."
The Swedish corporate tax rate has held steady for the past decade at 28 percent while the average of European nations has fallen to 26 percent. The rate cut will be financed by unspecified reductions in existing tax breaks.
The cut in the corporate rate will be paired with a reduction in the social contribution taxes paid by employers. From Industry Week:
"The tax proposals strengthen the incentive for investment and new hires, while simplified regulations reduce companies' administrative burdens," the government said. "This, combined with other initiatives presented in the budget bill, will soften the blow of the slowing economy and mitigate the effects on the labor market," it said.
Contrast the approach the liberal Swedish government is taking to help business to the way the Associated Press describes Obama's tax plans in an AP story today:
Obama would raise payroll taxA payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 24.8 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue. es on taxpayers with incomes above $250,000, and he would raise corporate taxes. Small businesses that make more than $250,000 a year also would see taxes rise.