U.S. Corporate Tax Rate Poised to Become Highest
March 29, 2012
On Sunday, the United States gets a distinction no nation wants -- the world's highest corporate tax rate. Japan, which currently has the highest rate in the world -- a 39.8 percent rate on business income between national and local taxes -- cuts its rate to 36.8 percent as of April 1. The U.S. rate stands at 39.2 percent when both federal and state rates are included, says CNN Money.
- Both Democrats and Republicans argue that the corporate tax rate should be lowered as a way of promoting greater economic growth, so that multinational companies have incentive to invest more in their U.S. operations than overseas.
- President Obama has proposed cutting the corporate rate to 28 percent, Republican challenger Mitt Romney proposes a 25 percent rate.
- Both sides are also in agreement for the need to reduce the loopholes and other exemptions that shield companies from paying taxes on all their income.
- That kind of reform could increase corporate tax collections, or at least leave them unchanged, even with a lower rate.
But reaching agreement on that kind of tax reform has proved to be virtually impossible, especially during an election year.
For example, President Obama wants to impose a minimal tax on the overseas profits of U.S. companies to discourage them from moving operations offshore to tax havens. Romney and the Republicans oppose that proposal.
So the United States is virtually certain to have the title of the world's highest corporate rate, at least until after the presidential election.
Source: Chris Isidore, "U.S. Corporate Tax Rate Poised to Become Highest," CNN Money, March 27, 2012.
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