Last year, I expressed skepticism that the White House was serious about reducing the corporate tax rate. And, sure enough, when the Obama Administration produced a plan earlier this year, it was a disappointing mix of a few good provisions and several unpalatable proposals.
This is unfortunate because the United States has one of the most punitive corporate tax systems in the developed world. Indeed, every singe European welfare state has a lower corporate tax rate than America – even leftists nations such as France and Sweden!
For a long time, only Japan imposed a more onerous tax rate than the United States. But even that now has changed. After toying with the idea since 2010, the Japanese government finally pulled the trigger and reduced the nation’s tax rate.
Here’s a brief blurb from Reuters.
The United States will hold the dubious distinction starting on Sunday of having the developed world’s highest corporate tax rate after Japan’s drops to 38.01 percent… Japan’s reduction , prompted by years of pressure from Japanese politicians hoping to spur economic growth, will give that country the world’s second-highest rate. …The average 2012 corporate tax rate for the 34 developed countries is 25.4 percent, according to the Organization for Economic Co-operation and Development.
That leaves America in the unenviable position of having the developed world’s highest corporate tax rate, somewhere between 39 percent-40 percent. This video explains why this isn’t a good idea.
It was my very first video, so it’s not a polished product, but the information is right on the mark.
The moral of the story is very straightforward. A high corporate tax rate is a self-imposed wound to American competitiveness. But that’s only part of the story. America also has a “worldwide” tax system, which forces U.S. companies to suffer a big disadvantage when trying to compete for market share in other nations.
No wonder even officials from the Clinton Administration have begun to argue that the corporate tax rate should be significantly lowered.