New EU Report Shows U.S. Corporate Tax Rate Out of Step With Global Trends

June 30, 2010

Eurostat, the statistical agency of the European Union, has released an informative update of tax trends across the EU over the past decade. By and large, the report shows a downward sloping trend in top statutory tax rates for both personal income taxes and corporate income taxes.

On average, the top personal income tax rate among the 27 EU nations fell 7.2 percentage points between 2000 and 2010, from 44.7 percent to 37.5 percent. Only four countries increased their personal income tax rates – Latvia (+1.0%), Portugal (+2.0%), Sweden (+4.9%), and the U.K. (a whopping +10.0% to 50.0%).

But the real story is on corporate income taxes where every country except Hungary, Malta, and Norway cut their top corporate tax rate during the past decade. Hungary was the only country to raise their rate, albeit 1 percentage point to 20.6 from 19.6.

As the table below shows, on average, the top statutory corporate tax rate among the EU27 fell 8.7 percentage points, from 31.9 percent to 23.2 percent. Among the 16 largest EU nations, the average rate is 25.7 percent.

By contrast, the top federal corporate rate in the U.S. has been fixed at 35 percent since 1993, and tops 39 percent when the average state rate is added to it. This is further evidence that the U.S. corporate tax rate is out of step with the rest of the developed world and needs to be cut dramatically for our economy to remain competitive globally.

Top Statutory Tax Rate on Corporate Income
Country 2000 2009 2010 Difference 2000 — 2010
EU 27* 31.9 23.5 23.2 -8.7
EA 16* 34.9 25.9 25.7 -9.2
Belgium 40.2 34.0 34.0 -6.2
Bulgaria 32.5 10.0 10.0 -22.5
Czech Republic 31.0 20.0 19.0 -12.0
Denmark 32.0 25.0 25.0 -7.0
Germany 51.6 29.8 29.8 -21.8
Estonia 26.0 21.0 21.0 -5.0
Ireland 24.0 12.5 12.5 -11.5
Greece 40.0 25.0 24.0 -16.0
Spain 35.0 30.0 30.0 -5.0
France 37.8 34.4 34.4 -3.4
Italy 41.3 31.4 31.4 -9.9
Cyprus 29.0 10.0 10.0 -19.0
Latvia 25.0 15.0 15.0 -10.0
Lithuania 24.0 20.0 15.0 -9.0
Luxembourg 37.5 28.6 28.6 -8.9
Hungary 19.6 21.3 20.6 1.0
Malta 35.0 35.0 35.0 0.0
Netherlands 35.0 25.5 25.5 -9.5
Austria 34.0 25.0 25.0 -9.0
Poland 30.0 19.0 19.0 -11.0
Portugal 35.2 26.5 26.5 -8.7
Romania 25.0 16.0 16.0 -9.0
Slovenia 25.0 21.0 20.0 -5.0
Slovakia 29.0 19.0 19.0 -10.0
Finland 29.0 26.0 26.0 -3.0
Sweden 28.0 26.3 26.3 -1.7
United Kingdom 30.0 28.0 28.0 -2.0
Norway 28.0 28.0 28.0 0.0
Iceland 30.0 15.0 18.0 -12.0
* Arithmetic average

Source: Eurostat, "EU27 Tax Ratio Fell to 39.3% of GDP in 2008."


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