Competitiveness and Corporate Taxes

By May 6, 2010General, Taxation

Wall Street Journal op-ed by Michael Boskin, professor of economics at Stanford University and a senior fellow at the Hoover Institution, “Time to Junk the Corporate Tax“:

President Obama has put tax reform on the agenda, but surprisingly little attention is being paid to fixing the most growth-inhibiting, anticompetitive tax of all: the corporate income tax. Reducing or eliminating the corporate tax would curtail numerous wasteful tax distortions, boost growth in both the short and long run, increase America’s global competitiveness, and raise future wages.

The U.S. has the second-highest corporate income tax rate of any advanced economy (39% including state taxes, 50% higher than the OECD average). Many major competitors, Germany and Canada among them, have reduced their corporate tax rate, rendering American companies less competitive globally.

From The Milken Institute report, “Jobs for America“:

Reducing the U.S. corporate income tax rate to match the OECD average would trigger new growth. By 2019, it could boost real GDP by $375.5 billion (2.2 percent), create an additional 350,000 manufacturing jobs, and increase total employment by 2.13 million.

National Association of Manufacturers President John Engler cited the Milken Institute’s findings, as well as its analysis of the R&D tax credit, in his remarks Wednesday in Phoenix to the Arizona Manufacturing Council. For more, see Phoenix Business Journal, “AZ manufacturers working from strong foundation, but need help.”

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