Lower Corporate Tax Rates Would Boost Growth (and Manufacturing)

By February 15, 2011Economy, Taxation

Martin Feldstein of the American Enterprise Institute, writing in The Wall Street Journal, “Want to Boost the Economy? Lower Corporate Tax Rates“:

President Obama has reached out to the business community with talk of lowering the corporate tax rate and improving the tax treatment of profits earned abroad by American companies. That would certainly be an important improvement in our tax system. Unfortunately, his desire to use the elimination of “loopholes” to avoid any loss of corporate tax revenue means that he cannot possibly go far enough in reducing corporate tax rates.

The U.S. corporate tax rate is 35% at the federal level and 39% when the average state corporate tax is included. The average rate in the other industrial countries of the Organization for Economic Cooperation and Development (OECD) is just 25%. Only Japan has as high a rate.

Eliminating every loophole in the taxation of domestic corporate profits identified by the administration’s own Office of Management and Budget would raise less than $60 billion of extra revenue in 2011, enough to lower the combined federal-state corporate rate to 35%. The U.S rate would still be higher than in every other country but Japan, and a full 10 percentage points higher than the average in other industrial OECD countries.

The full piece is behind a WSJ subscription wall, but AEI will post the column on its website on Feb. 22.

See also Curtis Dubay, Heritage Foundation, “Corporate Tax Reform Should Focus on Rate Reduction

Leave a Reply