STUDY WARNS OF HIGH U.S. CORPORATE TAXES
February 17, 2009
The U.S. corporate income tax rate is higher than all other global regions -- 14 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations, says a new study by KPMG, a U.S. accounting firm.
Of the 106 countries surveyed, only the United Arab Emirates, Kuwait and Japan impose a higher corporate tax rate than the combined rate of 40 percent in the United States. This is not good for America's tax competitiveness, says Scott Hodge, president of the Tax Foundation.
According to researchers:
- The global average corporate tax rate is 23.2 percent in the E.U., 26.6 percent in Latin America and 28.4 percent in the Asia Pacific region.
- Nearly 23 countries cut their corporate tax rates in 2008 alone, including Canada, Columbia, Denmark, Hong Kong, Italy, New Zealand, South Africa, Switzerland and the United Kingdom.
- In contrast, the U.S. corporate tax rate has remained unchanged since 1994.
- Recent OECD studies show U.S. corporate income taxes are 50 percent higher than the average among its counterparts in the industrialized world, and that corporate taxes are the single most harmful tax to GDP growth - even more harmful than personal income taxes or consumption taxes.
Furthermore, in 2008, the Tax Foundation released an analysis showing that the U.S. federal corporate income tax quietly taps family pocketbooks for nearly $370 billion per year in the form of higher prices, lower wages and poorer return on investment.
If even notoriously high-tax Sweden recognizes that taxes matter to a country's business climate and work incentives, when will the political class in Washington tack action, asks Hodges?
Source: Editorial, "KPMG Study Warns of High U.S. Corporate Taxes," Tax Foundation Tax Watch, Winter 2009.
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