India to Cut Corporate Tax Rate

March 4, 2015

India’s finance minister this week released a budget that includes, among other things, a five per cent reduction in the corporate income tax. Narendra Modi, the Prime Minister of India, won a landslide election last May on a pro-growth agenda.

The proposed budget would move India, one of the world’s largest economies, from a 30 per cent base rate to 25 per cent. (There are some surcharges that push the rate a few points higher by some measurements, including the ones we use at Tax Foundation. We measured the rate at 34% in our last report.)

While Indian tax news is not directly relevant to U.S. policy, it’s important to remember that this fits into a broader picture: the rest of the world has built a sort of consensus that corporate income is a poor tax base, and corporate income tax rates around the world have been steadily falling.

I expect this trend to continue with time. There’s nothing wrong with taxing income people earn from investments in corporations. But there’s a right way and a wrong way to do it. The 401(k) structure, for example, taxes investment income in a fair and elegant way. The corporate tax doesn’t. And that’s why it is in a long, steady decline throughout the world.

Was this page helpful to you?

No

Thank You!

The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?

Contribute to the Tax Foundation

Related Articles