U.S. corporate tax rates are higher than the tax rates of other big economies.
Not a lie. Its true.
1 - Even if after deductions US companies paid less it still wouldn't be a lie, the rate is actually higher. And the marginal rate has an impact, and still would even if the average percentage paid was less.
2 - After deductions the American rate is still higher than the rate is most other countries and in most other rich countries.
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After all the deductions are accounted for, Japanese companies face the highest effective tax rate worldwide. The U.S. multinationals come in second. Multinationals headquartered in tax havens like Bermuda face the lowest taxes.
forbes.com
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Corporate income tax reform is receiving serious
consideration in Washington. The Obama administration
has suggested reducing the federal corporate tax rate from
35 percent to 28 percent while broadening the tax base.
Presidential candidate Mitt Romney has said that he would
cut the corporate tax rate to 25 percent if elected.
The urgency of tax reform increased when Japan
recently enacted a reduction to its corporate tax rate. That
left the United States in the uncompetitive position of
having the highest statutory tax rate in the world, with a
combined federal-state rate of about 40 percent.
This bulletin presents new estimates of marginal
effective tax rates (METRs) on corporate investment for
90 countries. These tax rates take into account statutory
rates plus tax-base items that affect taxes paid on new
investment, such as deductions for capital depreciation,
inventory costs, and interest expenses. We ignore
temporary incentives because they do not support
sustained capital investment, but instead shift investment
from the future to the present year.
We find that the U.S. effective tax rate on new
corporate investment is 35.6 percent in 2012, which is
almost twice the average rate
for the 90 countries studied,
and it is also the highest rate among the major industrial
nations. These results underscore the need for U.S.
policymakers to tackle corporate tax reform.
cato.org
According to Tax Foundation president Scott Hodge, statutory rates make for better comparisons. Effective rates are unpredictable and vary across different industries, but the statutory rates are fixed, Hodge told us.
"(The effective tax rate) will differ from industry to industry and business to business, whereas the list price is what it is and everyone starts at that point," Hodge said.
But Joseph Rosenberg, a research associate at the nonpartisan Tax Policy Center, argued that "effective tax rates provide the best measure of comparison for overall tax burdens." Aparna Mathur, an economist with the conservative American Enterprise Institute, added in an e-mail that "both are equally valid measures of looking at the burden of the corporate income tax."
Our ruling
In a radio interview, Kyrillos claimed, "We've got the highest corporate tax rate in the world."
It’s accurate that, at 39.2 percent, the United States has the highest statutory corporate tax rate among industrialized nations. But with various tax breaks, U.S. effective corporate tax rates range anywhere from 23 percent to 34.9 percent, studies show.
Those effective tax rates may not land in first place, but they’re still among the highest in the world.
politifact.com
The 2011 foundation report summarized 13 studies of effective corporate tax rates across the world, which used different methodologies and were not limited to the OECD roster. The smallest study compared 10 countries; the largest, 183.
Those studies found the U.S. effective tax rate ranging from 23 percent to 34.9 percent, which often placed it in the top five, but never No. 1.
But the U.S. hit the top spot in a more recent report. Morrison told us the latest such comparison was made in September 2012 for the libertarian Cato Institute. That report calculated the U.S. effective rate at 35.6 percent and ranked it highest among OECD nations but fourth among all 90 nations it examined.
How did U.S. rates get to be among the highest? Actually, other countries dropped theirs, we learned by phone from Jonathan Masters, author of the Council on Foreign Relations piece.
We found succinct descriptions of the history in Time magazine and The Hill, a Washington, D.C. newspaper. An April 2, 2012, Time blog post says that while the U.S. rate stayed steady for two decades, "the trend internationally has been towards lower corporate tax rates." The Hill’s Aug. 27, 2012 blog post says that in 1986, the OECD nations’ average corporate tax was 50 percent, but "today, it’s 25 percent for those countries -- it has fallen in half. Meanwhile, the U.S. rate, which fell from 46 percent to 34 percent as a result of tax reform in 1986, is now stuck at 35 percent."
politifact.com
Also corporate tax rates have declined below those levels in several countries, and in the UK they are scheduled to go down to 21% in 2014.
3 - Many states also have corporate taxes, which add to the rate some companies pay by as much as 12%. |
