U.S. Soon Could Be Number 1 in Corporate Taxes
June 14, 2010
It is well known that the U.S. has the second highest corporate income tax among the major industrialized countries at more than 39 percent when the federal and average state rates are combined. Only Japan has a higher overall rate at nearly 40 percent.
That soon could change. Reuters is reporting that Japan's ruling Democratic Party will include a corporate rate cut in its platform for the upcoming upper house elections.
According to Reuters, "New Prime Minister Naoto Kan is expected to announce next week the party's pledges, which will also include steps such as consumption tax reforms…The corporate tax cut will be the key pillar of the party's growth strategy but the Democrats are not expected to state the exact figure of the planned reduction."
Should Japan cut its corporate income tax rate, the U.S. would find itself with the highest corporate tax rate in the industrialized world. The U.S. would also stand alone as one of the last remaining OECD nations to impose a world-wide tax system on corporate profits. Last year, both Japan and the United Kingdom took steps to exempt foreign earned profits from domestic taxation in order to stem the flight of capital out of their respective nations.