Being Numero Uno in Corporate Taxes is No Joke to the American People

April 2, 2012

The American people were greeted on this April Fools Day by what hardly qualifies as a joke by our government.  As of today, the United State will have the highest corporate tax rate in the world.  America’s business tax rate now tops out at 35 percent.  Add state taxes and American job creators will face a median rate of 39.2 percent. This new record certainly doesn’t call forth a sense of pride in the American people or encourage them to stand up and cheer:  “U.S.A., U.S.A!”

Up until today Japan held the dubious title of the highest Corporate Tax rate in the world.  Before cutting its corporate tax rate to 36.8%, Japan’s corporate tax rate stood at 39.8% including local and national tax. http://www.foxnews.com/opinion/2012/03/no-joke-obama-corporate-tax-rates-are-worst-in-world/#ixzz1qis8F55K 

According to exposethemedia.com: 

“Tokyo’s move is striking because its political class has long behaved as if tax rates don’t matter, and the government is wrestling with the need to finance a typically large budget deficit and an aging population.  But in 2010 politicians had a radical idea:  Cutting the corporate profits tax would boost economic activity and lead to higher revenues.”

The 2010 overall government-approved five percentage point cut was delayed by Japan because of last year’s earthquake and tsunami.  Today marks the first installment rate cut to 36.8% from 39.8%.  In 2015 Japan will drop its rate another 2.3 percentage points to 34.5%.  http://exposethemedia.com/2012/03/17/on-april-1-japan-cedes-the-h…  

Having the highest tax rate in the world is certainly not a distinction that any nation wants.  The U.S. was in the middle of the pack when tax rates were last changed in 1993, but since 2000 thirty of the world’s leading developed countries — seeking to boost their economies — cut their corporate tax rates.  Germany dropped its top rate by 22 points and Canada cut its rate by 13 points, while this nation failed to echo the trend.

The result:  Business is booming in both Germany and Canada. http://www.foxnews.com/opinion/2012/03/no-joke-obama-corporate-tax-rates-are-worst-in-world/#ixzz1qis8F55K 

Following is the Corporate Tax Rates in seven Major World Economies rounded off to the next percentage point:  http://sanjivcpa.com/u-s-corporate-tax-rate-no-1-in-the-world/   

 

  • United States:  40%
  • Japan:  37%
  • France:  35/%
  • Italy:  31%
  • Germany:  30%
  • Canada:  28%
  • United Kingdom:  26%

For those who are curious to compare Corporate and other tax rates throughout the world check:  http://www.worldwide-tax.com/

Where has President been these past three years?  It certainly is a nasty 2012 April Fools joke for the American people to hear that their nation is giving their own businesses every reason to move overseas.  Even Russia at 20 percent and China at 25 percent have lower rates, while this nation’s rate remains 10 to 15 percentage points above the international average.  The difference in tax rates means American companies are trying to complete wit one hand tied behind their backs.  

Many corporations have been lobbying Congress to lower the statutory corporate tax rate, even though many of them do pay far lower effective tax rates than the federal 35 percent because of existing loopholes.

The RATE coalition represents a group of 26 companies and organizations lobbing for lowering the tax rate.   James Pinkerton, co-chair of the RATE Coalition and a former White House domestic policy adviser to Presidents Ronald Reagan and George H.W. Bush, made the following remark:

“Our corporate tax code of the world’s leading rate leaves us in a weaker position relative to other leading economies.  That’s bad news for growth and jobs.  But the good news is there’s a sensible solution:  Lower the corporate rate to be in line with our competitors.   And there are many signs that the bipartisan political will exists to achieve that lowering.”  http://www.accountingtoday.com/news/US-Corporate-Tax-Rate-Bec

Republican are eager to work with President Obama and Democrats.  Unfortunately many Democrats and the Occupiers believe in increased taxes and more wealth redistribution, unable as they are to comprehend that high taxes do not create jobs. 

In a plan unveiled in February, President Obama seemed to come to the realization that it’s time to chop the federal rate to 28% from 35%.  But there was a catch.  Along with its proposed 28% rate, Obama’s plan would impose such a high penalty on U.S. firms with overseas operations that business groups rightly say his plan would be worse than doing nothing with its $350 billion in new, off-setting taxes.  http://exposethemedia.com/2012/03/17/on-april-1-japan-ceded-the-h…  

Republicans in the House are trying to work with President Obama and Democrats. Unfortunately many Democrats, unable or unwilling to comprehend that high taxes do not create jobs, advocate instead for increased taxes and more wealth redistribution. Their view of corporations is that they represents bottomless wells of potential tax money — which doesn’t work out that way in the real world — and have summarily resisted calls to cut America’s exorbitant tax rates.

On Thursday, March 30, the House passed a Republican-backed budget introduced by House Budget Committee Chairman Paul Ryan, R-Wis., which which called for lowering the top corporate tax rate from 35 to 25 percent.  Ryan’s plan would assist the corporate tax reform work being done in the House Ways and Means Committee. 

In light of the Democratic-controlled Senate, Paul Ryan’s plan doesn’t have a ghost of a chance of passing in the Senate.  A similar Ryan budget plan was approved last year in the House, but likewise failed in the Senate.  http://www.accountingtoday.com/news/US-Corporate-Tax-Rate-Bec…  

Researchers at the Heritage Foundation headquartered in Washington, D.C. have calculated that if federal corporate tax rates were cut to 25 percent the benefits to the Americans would be dramatic:  1) The After-tax income for the typical family would rise by almost $2,500.  2) The U.S. economy would create 581,000 jobs a year over the next decade. 

Once again President Obama has tried to fool the American people, as he did by pretending to support the Keystone XL pipeline, by indicating a willingness to cut the corporate tax rate to 28%, not withstanding that his tax “reform” proposal would actually hit businesses with $250 billion in new taxes. 

America needs a simple, fair, broad-based tax system with lower rates and fewer loopholes.  Such a tax system seems stymied for now.

Compiled by Tax Foundation President, Scott A. Hodge, are the Ten Benefits of Cutting the U.S. Corporate Tax Rate:  http://taxfoundation.org/files/sr192.pdf

l.  Cutting the corporate tax rate will promote higher long-term economic growth.

2.  Cutting the corporate tax rate will improve U. S. competitiveness.

3.  Cutting the corporate tax rate will lead to higher wages and living standards.

4.  Cutting the corporate tax rate will boost entrepreneurship, investment, and productivity.

5.  Cutting the corporate rate lowers the tax burden on low-income taxpayers and seniors.

6.  Cutting the corporate rate will lower the overall dividend tax rate and taxes on capital. 

7.  Cutting the corporate tax rate can attract foreign direct investment (FDI).

8.  Cutting the corporate rate would lead to lower corporate debt and reduce the incentives for income shifting.

9.  Cutting the corporate tax rate can reduce compliance coasts.

10. Cutting the federal corporate rate can help the states compete globally.

Although this nation can be proud of being uno one in countless ways, isn’t is about time to shed its “World Highest Taxes” title as soon as possible.

Voter education is necessary so that voters are given the facts instead of accepting the spin spewing forth from the White House and much of the mainstream media who are presently in election mode to promote and to re-elect President Barack Obama.

If successful, voters will ultimately not be happy with their choice, nor will their children or grandchildren.  History will look back to this time and wonder how those principles and ideals of our Founding Fathers were so easily discarded for a promise of Utopia, which has never existed and which could never exist, as citizens of Greece and other European countries are now finding out the hard way. 

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