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  • Chart of the Week: U.S. Rivals Japan for World's Highest Corporate Tax Rate

    Republicans and Democrats on the Joint Select Committee on Deficit Reduction this week finally agreed on something substantive: The U.S. corporate tax rate is too high.

    It’s a point we’ve been making for years at Heritage. High federal and state corporate tax rates — a whopping 39.2 percent when combined — make it difficult for U.S. businesses to compete internationally.

    Over the past decade, other countries in the Organisation for Economic Co-operation and Development have reduced their corporate tax rates. As a result, the United States now rivals Japan for the highest. This chart illustrates how the average corporate tax rates of industrialized nations have dropped while the United States has actually increase to more than 39 percent.

    The Joint Committee’s hearing about reforming the tax code took place Thursday and featured Thomas Barthold, chief of staff to the Joint Committee on Taxation. While lawmakers are still a long way from reaching consensus, even the panel’s Democrat co-chairman agreed something needed to be done.

    “Most people do agree that such high tax rates make the United States a less attractive place in which to do business,” said Sen. Patty Murray (D-WA), according to Bloomberg. “Instead of making and improving their widgets or hiring new people,” she said, businesses “spend too much time and effort devising business strategies aimed simply at tax avoidance.”

    For more infographics like this one, see Heritage’s 2011 Budget Chart Book, a user-friendly way to learn about the federal budget through pictures.

    Posted in Scribe [slideshow_deploy]

    12 Responses to Chart of the Week: U.S. Rivals Japan for World's Highest Corporate Tax Rate

    1. Dixon in Michigan says:

      What about the taxes paid — or NOT paid — by GE, Exxon Mobil, Carnival Cruise Lines and the other corporations that we've read about lately? What about the disproportionate share of income taxes paid by average, middle-income Americans to make up for the taxes that are NOT paid by the above companies. … the ones with the disproportionate (some would say criminal) influence over so-called "Representatives" in a country of the people, by the people and for the people. Or, quite simply, what about corporate America's "Effective Tax Rate" … what they REALLY pay?

      Time for an honest discussion of who's paying what and who's not …
      Start here, please:

      Talk about "entitlement programs!" Who wrote the laws that gave these breaks away? And who will right these wrongs?

    2. Dhperry says:

      Those of us with a basic economic knowledge know that corporations pass taxes on to consumers in the form of charging more. Eliminating corporate taxes would give the US an advantage both here and overseas. It would be a large incentive for companies to invest in America. Also, eliminate the requirement that companies pay taxes on income realized in other countries. This would encourage the companies to move that money back to the US.

      • Derp says:

        Spot on analysis. I mean, look at what the airlines did during the FAA shutdown when they couldn't charge the $50.00 tax that's usually assessed per ticket to fund the FAA. Instead of charging it, they passed those savings onto the customer by jacking up their ticket prices $50.00 and pocketing the money for themselves. Consumers didn't even FEEL that.

      • Kennedy says:

        I'll be back in the morning to explain to you how your basic economic knowledge is retarded <3

    3. Jeff, Illinois says:

      Oh . .. please . . with loopholes our corporations are much much further down the list than that chart shows. This is just another GOP talking point . . !!

    4. @dougragan says:

      Never mind the fact that the biggest loophole is the ability of larger corporations to send jobs overseas. Just keep saying that they have loopholes and you should be able to continue to live with yourself.
      They will keep sending those jobs overseas as long as they can cut their cost to do business. And the liberals will continue to spread their class warfare lies.

    5. Frank says:

      That's extremely deceiving though since it's a marginal tax rate (as you well know). There are ton of write-offs that allow you to reduce your taxable net income, and its an extremely progressive system. I think that can be seen given 2/3rds of corporations pay no federal income tax whatsoever.

    6. njconservative says:

      Between wages, benefits, federal, state and local taxes and regulations that burden most businesses (note that I say “most” businesses), it’s a wonder they make any money at all.

      And it's no wonder why they offshore their businesses when they can.

    7. Bobbie says:

      logic isn't that difficult. Leadership working against it in opposition to increase productivity in America, is so low and unworthy to be held victims under American leadership force that'll swallow the whole country. So many ways to reduce unemployment and keep jobs in America, this dictator leadership deliberately takes any and all ability away!! hmm!!!?????? No friendly business-friendly government for America anymore!!! Obama wants CHANGE!!!! America wants HERMAN CAIN!!!!!!

      • Donmore says:

        American companies that earn money here should leave their earning here. Tokyo Rose showed her UN-Americanism, so do American companies that off shore. Should it all be about a dollar, what about America?

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