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U.S. Corporate Tax Rate Highest in G20

At CNS News today, Terry Jeffrey writes, "The United States has the highest top statutory corporate tax rate—39.1%--of any nation in the G20, according to a study released Wednesday by the Congressional Budget Office," and then adds, "That rate is nearly twice as high as the 20-percent rate in Russia, which, along with Saudi Arabia and Turkey, has the lowest statutory corporate tax rate in the G20."

He then continues:

"The U.S. won the top spot on the statutory-corporate-tax-rate list after Japan and Germany, which formerly ranked first and second, cut their rates.

“The United States made no change in federal corporate tax rates between 2003 and 2012,” said the CBO, “and by 2012, it had the highest top statutory rate in the G20.”

“In 2003, Japan, Germany, and the United States had the highest statutory corporate tax rates among G20 countries,” said the report, “by 2012, reductions in Japan’s and Germany’s top rates had dropped them to second and ninth place, respectively, boosting the United States to the top of the list.”

“At the time that the tax rates considered in this analysis were computed,” said the CBO report, “2012 was the most recent year for which complete data were available.”

"However, since 2012, the report noted, the trend among G20 nations that changed their corporate tax systems was to cut corporate taxation. (emphasis added)

“Four G20 countries modified their corporate income tax systems after 2012, generally resulting in lower effective tax rates,” said the report. “Japan, South Africa, and the United Kingdom reduced their top statutory corporate tax rates.”

"The CBO report looked at three different measures of corporate taxation in the G20 countries. These included the top statutory corporate tax rate, the average corporate tax rate, and the effective corporate tax rate.

"The top statutory corporate tax rate in the United States includes the top federal tax rate on corporations combined with the taxes that states impose on corporations."

Read the complete article here.

Here is the link to the Congressional Budget Office (CBO) report, "International Comparisons of Corporate Income Tax Rates." In response to the question, "How do different tax rates affect business decisions," the CBO answers:

"All three types of corporate tax rates affect a company’s decisions, but each influences a different choice. Because of their broader scope, average and effective corporate tax rates are better indicators of a company’s incentives to invest in a particular country than is the statutory corporate tax rate. The average corporate tax rate reflects a country’s corporate tax rate schedule, the system’s tax preferences for business investments, any surtaxes, and possibilities for tax avoidance or evasion. Companies consider the average corporate tax rate when deciding whether to undertake a large or long-term investment in a particular country. The effective corporate tax rate, which is a measure of the tax on a marginal investment, is more informative for decisions about whether to expand ongoing projects in those countries in which a company already operates. In contrast, businesses focus on the narrower statutory corporate tax rate when they develop legal and accounting strategies to shift income earned in high-tax countries to low-tax jurisdictions—especially low-tax jurisdictions in which those businesses do not plan to invest and from which they thus expect no benefits from tax preferences for business investments."

Jeffrey includes the following chart with his report, but notes,"The full version of this chart, including the rankings for the "effective corporate tax rate," is on page 2 of the CBO report:"

Growls readers are urged to make their views about the competitiveness of the United States' corporate income tax rate, by comparison to those of the G20 nations, known to their members of Congress. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:

  • Senator Mark Warner (D) -- write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response. And tell them ACTA sent you.

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