U.S. should ax destructive corporate tax

Washington Times ^ | 09/25/2012 | Richard Rahn

[SeekAndFind]

It’s difficult to say definitively which tax is the most destructive. The corporate income tax is a leading candidate for causing higher prices to consumers, lower wages to workers and lower returns to investors. It misallocates capital, resulting in higher levels of unemployment and lower levels of economic growth and opportunity, and it taxes income that has already been taxed as least once before.

The 2012 annual rankings of “Corporate Tax Competitiveness” was published in Canada by University of Calgary and in the United States by Cato Institute. In the study, authors Duanjie Chen and Jack Mintz of the school of public policy at the University of Calgary present new estimates of effective tax rates on corporate investment for 90 countries.

“These tax rates take into account statutory rates plus tax-base items that affect taxes paid on new investment, such as deductions for capital depreciation, inventory costs, and interest expenses.” The United States is in the “uncompetitive position of having the highest statutory tax rate in the world, with a combined federal-state tax rate of about 40 percent.” Only the economic basket cases of Argentina, Chad and Uzbekistan have slightly higher effective marginal tax rates. The United States at 35.6 percent has almost twice the average rate (19.4 percent) of the other developed nations.

Other nations have been cutting their corporate tax rates, and some do not even have the tax. Canada has reduced its federal rate to 15 percent versus the U.S. rate of 35 percent. The report notes that even though Canada reduced the federal-provincial tax rate by 31 percent from 2000 to 2010, and despite the 2009 recession, corporate tax revenues have remained roughly constant as a share of gross domestic product. Even Sweden has a much lower rate, and it has just announced a further reduction

[unixfox]

Corporations don’t pay taxes. They pass it along to the consumer.

But we want to make sure those evil corporations pay their “fair share”

[mtrott]

I don’t see why corporations pay any income tax in the first place. A corp. is simply an association of individuals who ALREADY PAY INCOME TAX on their income. Why should any income generated by their efforts be taxed again? It only serves to reduce competitiveness by reducing funds for R&D, product development, and marketing.

[mo]

“They pass it along to the consumer...”

that’s precisely why Congress loves it.....its camouflaged taxation to the citizen

[sr4402]

Any corporation, worth it’s salt, is thinking of leaving the US. It’s competition sure is.

[nothingnew]

Excellent points. Also, why are social security payments and unemployment taxed? The money was a tax in the first place. Seems like it's a tax on a tax......

FMCDH(BITS)