A clear, two-minute video explaining how the Obama Administration’s plans to rework corporate tax deferral rules will make U.S. businesses less competitive overseas and hurt jobs creation here in the United States.

From the Tax Foundation.

The Tax Foundation and CompeteUSA have announced the winners of their video competition designed to inform people about the high U.S. business tax rate and how those taxes harm our competitiveness, wages, and living standards. And the winner is Andrew Patterson of Edmond, Oklahoma:

In “Tax Attack,” Patterson highlights that businesses make everyday decisions based on corporate tax systems and that our high business taxes are making American corporations look internationally for their offices, banking, labor and operations. Patterson, who lives in Edmond, Oklahoma, is a business owner himself, providing film and postproduction services to companies including retailers, business firms, nonprofit organizations and natural gas companies. 

Congrats! A timely competition, indeed.

(Hat tip: John J. Miller)

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.

To be fair, Sweden isn’t quite the cliched Socialist Paradise/Pandaemonium that used to be held up to the United States as the ultimate comparison for where big government takes you, but still…

From Agence France Presse:

Sept. 8, 2008 — Sweden on Sept. 8 announced plans to cut the corporate tax rate from 28% to 26.3% in 2009 in a bid to improve the business climate. The move is part of a 16-billion-kronor (US$2.4 billion) package the government will formally present in its budget bill to parliament later this month.

Reducing the corporate tax rate will cost around 7.0 billion kronor.

The government said it would also reduce social contribution fees paid by employers by around one percentage point, a move that will cost another 7.5 billion kronor.

“The tax proposals strengthen the incentive for investment and new hires, while simplified regulations reduce companies’ administrative burdens,” the government said.

A good test for candidates’ tax plans. Do their tax proposals “strengthen the incentive for investment and new hires,” and do their “simplified regulations reduce companies’ administrative burdens?”

And let’s check with the Tax Foundation again, see what’s new.

Washington, DC, August 29, 2008 – A recent study shows that while America has left the major features of its business tax system unchanged over the past fifteen years, virtually all developed nations have lowered their corporate tax rates, potentially hurting the competitiveness of the United States.

In Tax Foundation Fiscal Fact No. 143, “Comparing International Corporate Tax Rates: U.S. Corporate Tax Rate Increasingly Out of Line by Various Measures,” Tax Foundation Vice President for Economic Policy Robert Carroll, Ph.D., uses various methods to compare U.S. corporate tax rates with member nations of the Organization of Economic Cooperation and Development (OECD) and the G-7 countries.

“The U.S.’s combined federal-state statutory corporate tax rate (39.3%) is now well above the weighted average for both the member nations of the OECD (31.9%) and the larger G-7 countries (33.8%),” says Carroll. “Moreover, both groups of countries continue to lower their tax rates. Since the early 1980s, the weighted average corporate tax rate has fallen by 38 percent for OECD nations and 37 percent for the G-7 countries, not counting the U.S.”

The Wall Street Journal opinion page recognizes the implications of the Tax Foundation’s latest report on corporate tax rates around the world. From “America the Uncompetitive“:

The new international tax rankings are out for 2008, and congratulations to Washington, D.C., are again in order. Our political class has managed to maintain America’s rank with the second highest corporate tax rate in the world at 39.3% (average combined federal and state).

Only Japan is slightly higher overall, though if you are silly enough to base a corporation in California, Iowa, New Jersey, Pennsylvania, or other states with high corporate levies, your tax rate on business income is even higher than in Tokyo. For the first time, the U.S. statutory rate is now 50% higher than the average of our international competitors, continuing a long-term trend as the rest of the world keeps reducing corporate tax rates.

The Journal also debunks the populist corporate bashing that accompanied the latest GAO report on corporate tax payments.

Last week Senator Byron Dorgan of North Dakota waved around a new politically generated study by the Government Accountability Office (GAO) finding that 28% of large U.S. corporations paid no income tax in 2005. “It’s time for big corporations to pay their fair share,” Mr. Dorgan roared.

Well, the Tax Foundation looked at those numbers and found that, among the large companies that paid no taxes, 85% of them also made no profits that year. American Airlines and General Motors escaped income tax for 2005 through the clever tax dodge of losing $862 million and $10.5 billion, respectively. How unpatriotic.

Read the whole thing, if you would.

The global competitive environment keeps getting tougher. Nine key trading partners cut their rates in 2007.

From the Tax Foundation’s Tax Policy Blog:

New Study: U.S. Corporate Tax Rate 50% Higher than Economic Competitors

by TF Staff

Tax Foundation President Scott Hodge this morning released the latest Tax Foundation Fiscal Fact in response to a new study from the Organisation for Economic Co-Operation and Development (OECD). The OECD study 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 of the U.S. failure to lower its corporate tax rate for more than two decades while other major trading nations lowered theirs, the U.S. corporate tax rate is now 50% higher than the OECD average. Nine key trading partners cut their rates during 2007.

Said Hodge:

Continued failure by U.S. tax policymakers to keep up with our top global economic competitors means that we’re solidifying a trend that will result in our children and grandchildren not seeing the economic growth we’ve seen in our lifetimes. There’s a real-wallet impact for Americans as we continue to sit idly by while other countries improve the way they do business, and we should be very concerned about jobs, capital, and investments moving from high-tax countries to low-tax countries.

Click here for the Tax Foundation Fiscal Fact. Click here for the press release.