Corporate Tax Rates around the World

August 25, 2014

Chad and the United Arab Emirates -- these are the only two countries with top marginal corporate tax rates higher than the United States. And at 39.1 percent, the corporate tax rate in America is the highest corporate tax rate among the 34 member nations of the Organization for Economic Cooperation and Development (OECD).

In fact, writes Kyle Pomerleau, economist at the Tax Foundation:

  • The United States' tax rate is a full 16.5 percentage points higher than the worldwide average of 22.6 percent.
  • The average worldwide tax rate has been declining over the last decade, making the United States' high rate more and more unusual.
  • The lowest top marginal rates are in Turkmenistan and Uzbekistan, each of which have rates of 8 percent.

Interestingly, of the twenty countries with the lowest top corporate tax rates, Ireland (at 12.5 percent) is the only industrialized nation to make the list.

Companies, not surprisingly, look to invest in countries with low income tax rates. As the rest of the world reduces their taxes on corporate income, Pomerleau warns that the United States is at risk of losing new investment and business due to its unfriendly tax climate.

The NCPA's Tax Analysis Center has done a great deal of work on corporate taxes. According to a recent study, replacing the corporate income tax with a 9 percent flat tax would increase America's GDP by 6 percent. It would also increase the wages of all workers by 6 percent in the short term and 9 percent in the long term.

Source: Kyle Pomerleau, "Corporate Income Tax Rates around the World, 2014," Tax Foundation, August 20, 2014.

 

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