CORPORATE TAX LEGISLATION
July 6, 2004
Corporate tax legislation now moving through Congress would make U.S. companies more competitive in the global marketplace, says Michael Baroody, executive vice president of the National Association of Manufacturers.
The pending legislation, which would repeal current export-tax breaks, moves the United States closer to complying with World Trade Organization (WTO) obligations and ending punitive sanctions by the European Union (EU) on a number of U.S. manufactured goods.
But EU sanctions are only part of the problem, says Baroody. U.S. corporate-income-tax rates are much higher than those in other countries, putting it at a distinct disadvantage in global competition:
- Currently, U.S. corporations pay combined federal and state income taxes at an average rate of 40 percent.
- This is significantly higher than rates averaging about 30 percent for the 30-nation Organization for Economic Cooperation and Development, the European Union and Asia-Pacific countries.
- For manufacturers alone, the U.S. corporate-tax burden reduces cost competitiveness by 5.6 percent, according to a recent study by the Manufacturers Alliance/MAPI and the National Association of Manufacturers.
The tax relief moving through Congress includes an extension of the research-and-development tax credit, a number of international tax reforms, a temporary incentive to invest foreign profits in the United States, reduced taxes on domestic-manufacturing income and enhanced investment incentives for small businesses.
Source: Michael Baroody, "Tax relief justified," USA Today, July 6, 2004.
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