D.C. Examiner: High Corporate Taxes Hurt the Real Economy

By October 12, 2008Economy, Taxation

An editorial in the Sunday Examiner, “High Corporate Taxes Hurt the Real Economy“:

As the current economic crisis runs its course, lawmakers must figure out how to help this nation’s “real economy” of goods and services regain its accustomed place as the strongest in the world. By far the best and the easiest place to start is by reforming America’s corporate tax structure to catch up with Europe and Asia. Step one is a lower corporate income tax. No better way exists to immediately improve the competitiveness of American companies, to repatriate jobs from abroad back to the United States, and to revitalize the whole economy.

Recent, relevant analysis from the Tax Foundation, “U.S. Corporate Taxes Now 50 Percent Higher than OECD Average“:

Amid rising concerns about the state of the U.S. economy, new data compiled by economists at the OECD shows that for the 17th consecutive year the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same. As a result, the overall U.S. corporate tax rate is now 50 percent higher than the OECD average.Combined with another new OECD study that calls the corporate income tax the most harmful type of tax for economic growth, the implications for U.S. policy are clear. The long-term prospects of the U.S. economy are at risk as long as our corporate tax rate remains out of step with the rest of the world.

The U.S. continues to have the second-highest combined federal-state corporate tax rate among industrialized countries at 39.3 percent. Only Japan has a higher overall corporate tax rate at 39.5 percent. By contrast, the average corporate tax rate among OECD countries has fallen a full percentage point in the past year, from 27.6 percent to 26.6 percent. Ireland’s 12.5 percent corporate tax rate remains the lowest among OECD nations.

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