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  • Corporations Know U.S. Has Uncompetitive Tax Rates

    Every year the international accounting and consulting firm KPMG issues a Corporate Tax Survey to “help our member firm clients and other organizations consider developments across borders.” In other words, to better inform their clients about which countries offer the most competitive environments for business. This year KPMG reports:

    [T]the most remarkable result of our 2008 survey is that we have found no country anywhere that has raised its rate since last year. The global average is, once again, down nearly a full point to 25.9 percent with the EU average down to 23.2 percent, the Latin American rate down half a point to 26.6 percent, and the Asia Pacific rate down 0.8 percent to 28.4 percent. Here, again, we are seeing a steady strengthening of efforts to widen the tax base and improve enforcement.

    So while Europe, Latin America, and Asia all have corporate tax rates in the mid-20s, where does the U.S. rate stand? Again from the KPMG report:

    The marginal federal corporate income tax rate on the highest income bracket of corporations is 35 percent. State and local governments may also impose income taxes ranging from less than 1 percent to 12 percent, and the top marginal rates of which average approximately 7.5 percent. A corporation may deduct its state and local income tax expense when computing its federal taxable income, generally resulting in a net effective rate of approximately 40 percent.

    According to the tables provided in the report only three countries have higher corporate tax rates than the U.S.: United Arab Emirates at 55%, Kuwait at 55 %, and Japan at 41%. Instead of sticking with high rates that kill job growth, many countries are cutting corporate tax rates. In the past year China, Germany, Hong Kong, and the United Kingdom all lowered their corporate rates.

    For the record, Barack Obams proposes keeping U.S. corporate tax rates at their current levels, while John McCain proposes lowering them.

    Posted in Economics [slideshow_deploy]

    One Response to Corporations Know U.S. Has Uncompetitive Tax Rates

    1. Pingback: Business blog » Blog Archive » Corporations Know US Has Uncompetitive Tax Rates

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