This might come as a surprise to you, but the United States is near the top of the list of industrialized countries with the highest corporate tax rates.
You may be asking yourself "so what," or "who cares," but it's important to recognize that lower corporate tax rates result in attracting more investment capital. A reduction of the federal corporate tax rate would increase firms' productivity and investment incentives, and ultimately stimulate our nation's long-term competitiveness by enhancing economic freedom. The end result would be a boon to your family budget.
The trend for countries around the world is to slash corporate tax rates to spur economic growth, yet Washington has yet to come to grips with this financial reality.
Currently, America's combined corporate tax rate sits at 40%, and it has been there since 1994. Last year alone, 23 counties slashed their corporate rates, including Canada, China, Columbia, the Czech Republic, Denmark, Germany, Hong Kong, Israel, Italy, Malaysia, New Zealand, Singapore, South Africa, Spain, Switzerland, and the United Kingdom.
According to a new study release by the accounting firm KPMG:
"U.S. corporate income tax rate is higher than all other global regions14 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations. 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. The United Arab Emirates and Kuwait each have a staggering tax rate of 55 percent; Japan's rate is 40.69 percent."
The Heritage foundation reports that:
"Even Europe's old welfare states have joined the aggressive tax cut parade: Sweden has cut its corporate tax rate to 28 percent from 60 percent; Norway's rate has dropped over 50 percent to 28 percent; and Denmark's corporate tax rate is now 25 percent."
In fact, Sweden is considering reducing it further to 26.3 % from the 28% it is at now.
If our competitors around the world are making their country a friendlier place to do business while America's corporate rates remain high, it doesn't take an economist to realize that our global competitiveness will be left in the dust.
For more information about the study, check out the non-partisan Tax Foundation's most recent newsletter (Pg. 5).
If we want to create jobs and stimulate the economy, one of the best ways we can do that is by cutting the corporate tax rate, not by spending hundreds of billions to stimulate government and creating more and more debt for our children.