A report from the Tax Foundation gives us the happy news that as of next month, America will be number one in a new field: corporate income taxes.
The combined federal and (average) state US corporate tax is 39.2%. Among the Organization for Economic Cooperation and Development (OECD) countries — the 34 most prosperous countries, which include all of our major economic competitors — this is exceeded only by Japan, at 39.5%.
During the last decade, nine of the OECD countries cut their corporate tax rates by 10% or more. The biggest tax-cutters were Canada, Germany, Greece, Iceland, Ireland, Poland, the Slovak Republic, and Turkey. The average corporate income tax of the OECD nations, excluding the US, has fallen from 38% in 1992 — which was the first year in which the average dropped below the U.S. level — to 25.5% today.
And 75 of the non-OECD countries have also dropped their corporate tax rates since 2006.
Now Japan has announced that effective next month, its corporate tax rate will drop, too. It will fall by 4.5%, to 35%. England is also lowering its rate next month, from the current 28% to 27%, on the way to a scheduled 24% within three years. That will leave the US with the highest rate in the developed world — a full 10% above the non-US OECD average.
If the US wanted to match the OECD average and China’s current rate (the rate was lowered in 2008), it would have to fall to 20% at the federal level. This is most unlikely under Obama’s regime.
So we will remain less competitive, and wonder why our unemployment remains high.