We Compete in a Global Economy

By March 14, 2008Economy, Taxation

Yesterday’s budget votes in the House and Senate went whistling past the graveyard of global competition, willfully ignoring the reality that their other countries are cutting their corporate tax rates to improve their competitive positions. From The Wall Street Journal:

WASHINGTON — Congress endorsed letting many of President Bush’s tax cuts expire during largely symbolic voting on budget blueprints.

Certain marginal tax rates and reduced rates for long-term capital gains and dividends, which are set to expire at the end of 2010, wouldn’t be extended under a budget blueprint passed by the House yesterday and in a separate plan passed late last night by the Senate.

Time to turn again to the Tax Foundation’s work on corporate tax rates across the world as reported in its Fiscal Fact No. 108 from last October:

Five countries in the Organization for Economic Cooperation and Development (OECD) cut their corporate income tax rates in 2006, and eight more, including Germany, will have cut their rates by January 1, 2008.

In the OECD, only Japan’s 39.5% rate is higher than thef U.S. rate right now.

Join the discussion One Comment

  • Linda M. Beale says:

    This is misleading, because reading it one would assume that the US is a real problem merely because of its tax rates. But taxes have to be understood in terms of base and rates, not rates alone. When you look at all the various “tax expenditures” in the Code, you find that the corporate tax in the US is actually very low. In fact, if you look at effective tax rates, it is clear that the United States is a tax haven for corporations. Half the largest corporations in the country pay no federal income tax at all.

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