Russia to Cut Corporate Taxes, Washington Dithers
November 20, 2008
File this under “What’s wrong with this picture?” Bloomberg is reporting that Russian Prime Minister Vladimir Putin has announced a sweeping economic package to “prevent the kind of financial crises that shook the country after the collapse of the Soviet Union.”
The tax changes in Putin’s plan would cut the Russian corporate tax to 20 percent from 24 percent on January 1st and “reduce taxes for small businesses and speed refunds of value-added tax.”
Meanwhile, China—which cut its corporate tax rate to 25 percent this year from 33 percent—recently announced reforms to their VAT in order to reduce the cost of the tax on businesses.
By contrast, there has been little or no discussion in the U.S. about cutting business taxes as a means of boosting the economy in the short term even though America has the highest federal level corporate tax among industrialized countries, at 35 percent.
These trends are further proof that the U.S. is moving in the wrong direction on tax policy while the rest of the world—including ostensibly Communist countries—are moving in the right direction by cutting business taxes.