Skip to content

U.S. Corporate Income Tax Rate Approaching Twice the World Average

By: William McBride

KPMG has released their annual survey of corporate and indirect taxAn indirect tax is imposed on one person or group, like manufacturers, then shifted to a different payer, usually the consumer. Unlike direct taxes, indirect taxes are levied on goods and services, not individual payers, and collected by the retailer or manufacturer. Sales and Value-Added Taxes (VATs) are two examples of indirect taxes. rates:

“Our 2011 survey of the world’s corporate and indirect taxA direct tax is levied on individuals and organizations and cannot be shifted to another payer. Often with a direct tax, such as the personal income tax, tax rates increase as the taxpayer’s ability to pay increases, resulting in what’s called a progressive tax. rates continues the story told in earlier years. 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 have been steadily falling for a decade in many countries, while value added tax and goods and services tax (VAT/GST) systems have proliferated across the globe, rising each year to higher rates and applying to more items as indirect tax systems mature. Some commentators have wondered if these dual trends were temporary anomalies that would reverse over time. Based on our reading of this year’s survey results, the chance of a return to the pre-2000 status quo is remote and the global re-balancing of corporate and indirect taxes will continue.”

The following graph illustrates just how dramatic the decline in corporate tax rates has been over the last decade, that is everywhere except the U.S.

Follow William McBride on Twitter @EconoWill