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 …
A widely propagated myth contends that raising top tax rates doesn’t hurt small businesses because only a small percentage of them pay rates at that level. But the number of businesses that pay top rates is economically meaningless. By this more accurate measure it is obvious that raising top income tax rates would have an enormous negative impact on the most successful small businesses and the many workers they employ. According the Treasury Department and as shown in the chart below, 8 percent of small businesses pay the highest two …
On this week’s season premiere of the popular AMC show “Mad Men” viewers were reminded about the punitive high tax rates in the 1960s: [youtube]http://www.youtube.com/watch?v=tx8bQ-hqIUY[/youtube] This episode of Mad Men takes place in 1963, when the top income tax rate was 91 percent on incomes over $200,000 ($400,000 for married couples). That translates to about $1.4 million in 2009 dollars. The top rate today is 35 percent on incomes over $372,950. In 1963, by comparison, incomes over $10,000 (about $70,000 in 2009 dollars) paid 38 percent. As the scene from …
