Skip to comments.U.S. to have Highest Corporate Tax Rate in the World
Posted on 07/17/2012 4:02:47 AM PDT by tobyhill
Most of the time being number one is good. But when it comes to having the highest tax rate in the world, it is much better for a country to be bringing up the rear.
Currently Japan holds the inauspicious distinction of having the highest corporate income tax rate in the world (39.5 percent). The United States is a close second, only a few tenths-of-percentage points behind.
Japan will soon fall from the top spot because it has finally recognized what the rest of the industrialized world realized over a decade ago: A low corporate income tax rate is vital for economic growth in the global marketplace. As such, Japan just announced it will reduce its corporate income tax rate by 5 percentage points down to around 35 percent. This remains far above the 25 percent average rate of other industrialized countries, but for them it is a start.
(Excerpt) Read more at blog.heritage.org ...
We should cut corporate taxes to 10%. And cut them all the way to 0% if the company in question has all of its manufacturing in the U.S.
C’mon. There are Soviet Union and East Germany to beat. None of them around anymore? Nevermind!
Corporations will go elsewhere to keep their prices lower for consumers and make a better profit margin.
” U.S. to have Highest Corporate Tax Rate in the World “
Canadians Richer Than Americans For First Time In History
Excellent comrades, excellent!!!
Obama is at war with our private sector pure and simple. The only part of it he exempts from attack are his big time donors.
Russia Corporate Tax
The tax on company profits is made up of 2 rates:
- Federal tax - -2%.
- Regional tax - 18% (with a possible incentive reduction of up to 4.5%).
The maximum profit tax is 20%.
Not to worry.. Americans do not create their own businesses.
If taxes are increased, corporations must maintain shareholder profit, so they are forced to "pass on" increased costs to their customers or their employees. The net result is higher prices, lower wages, and fewer jobs. A trifecta.
If anything, the high U.S. corporate tax rate just serves as a huge incentive for corporations to do things to reduce their tax burden. These would include: (1) offshoring some of their operations, (2) inflating expenses, (3) altering the timing of major discretionary purchases, etc.
Ironically, paying huge salaries and bonuses to top executives is one of the easiest ways for a corporation to reduce their tax burden along the lines of Items (2) and (3) above.
This is false. If you are in competition with someone who can charge just the same price as you and then you get a tax bill, you won't raise your prices and cut your throat. You'll take the money out of funds available for investment and die slower. "Passing the cost on to the consumer" only happens in a closed market.
The corporate tax rate should be 0%. Let that revenue pass through to the owners/stockholders, etc. A corporation is people. It is simply a legal construct to protect against risk.
There is only ONE country on this graph/table whose CIT is going up.
Russia and China both have lower corporate taxes than the US and Europe. Russia has a flat tax, and China is rapidly moving in that direction.
Even North Korea is beginning to look better to do business in than the USA.
If you reduce the profits with a high corporate rate, you choke off the growth of a company. So, unless a company doesn't want to expand, they have to set their prices to cover costs, and generate a sufficient amount of profits after taxes to fuel expansion.
Profits are also used to pay dividends. Dividends are not a deductible expense, so dividend distributions are taxed at the corporate level -- reducing the potential dividend.
This is also the reason for the lower tax rate on dividends at the individual level (after distribution): that income has already been taxed once at the corporate level. If dividend distribution were a deductible expense for the corporation, they could be fairly taxed at ordinary income rates on the individual return.
You should at least take an introductory course in accounting. Taxes are included in the cost section of a company’s books. The accounting term “net income” accounts for taxes. It is described as the following formula:
Net sales (revenue)
Cost of goods sold
= Gross profit
SG&A expenses (combined costs of operating the company)
= EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization)
Depreciation & amortization
= EBIT (Earnings Before Interest & Taxes)
Interest expense (cost of borrowing money)
= EBT (Earnings Before Tax)
= Net income (EAT - Earnings after tax)
Now look at the following page that defines the ratios for financial statments (http://cpaclass.com/fsa/ratio-01a.htm). Note how many formulas use net income.
Consider this - a board, owner, stockholder etc. expects a certain percentage of return on their investment. If they dont get that return, they pull their money out. Thus the decision authority will set the net profit to where they can acheive that return. Thus the cost of taxes on the profits are included in the final price.
‘Keep in mind that while the corporations actually pay the tax, they will just pass the cost to the consumer.
Corporations will go elsewhere to keep their prices lower for consumers and make a better profit margin.’
If you ever owned a business or developed a product, you would know that is not true. When income taxes go up, you lose your profit margin. You can’t keep the same previous margin by simply increasing prices and passing on your income tax cost to a customer. Give it a shot. See how long that lasts.
Sales tax is a different story. Those taxes are directly passed through.
So am I and every time I have revenue, the government taxes it. So no dice. Corporations get taxed unless they meet my requirements stated earlier.
It is simply a legal construct to protect against risk.
Correct, it's a form of socialism wherein the government - paid for by the taxpayers - acts as a safety net. If you want the liability for taxes onto the owners/stockholders, then they need to be liable for lawsuits/bankruptcies and whatever ills befall a corporation, hence the corporation no longer is a person.
Either the corporate "person" pays the tax or it isn't a person.
As bad as the corp marginal rates are here, thank our lucky stars we do not have a VAT. VAT’s are pure evil.
That’s all great. Now please use the information in your post to explain where in the process a high corporate tax burden is “passed along to the consumer.”
Interestingly, there are many common U.S. business practices that are driven by U.S. tax law more than anything else. Financing capital expenditures is a good example of this. U.S. tax law actually penalizes companies for paying major capital expenditures up front out of the company's profits -- because the capital expenditure is not deductible as a current expense, and because profits are taxed at the corporate tax rate. As a result, companies have a huge financial incentive to borrow money for these capital expenditures -- since interest on bank loans or corporate bonds is deductible as a current expense.
If a policy makes it more expensive for one particular entity to do business, that entity will not be able to pass those costs along to consumers. On the other hand, if a policy imposes added expenses on competitors (or entities which would be competitors but for such expenses), the consequent reduction in competition will allow an entity to raise consumer prices or cut employee wages.
In general, if the number of businesses in some particular market field increases, worker wages will rise and consumer prices will fall, but shareholder returns will decrease. Since investments flock toward market fields which can offer better returns than could be achieved elsewhere, and away from those which do not, this results in an equilibrium number of businesses in each market field.
Corporate tax rates reduce the shareholder returns that are available within many market fields, thus reducing the number of businesses competing within them. This in turn depresses wages for employees while increasing prices for consumers.
I wish there were some way to make more people look at the behaviors which result from various policies, and ask whether the behaviors on the whole produce or destroy real wealth (e.g. by causing things to be used more or less efficiently than they otherwise would be). Policies which promote the net destruction of wealth cannot yield prosperity for anyone other than a few elite. Policies which promote the creation of wealth, by contrast, can yield prosperity for everyone.
Just wait until Phony-Care kicks in full tentacles. Year by year leverage and all. Along with all their Phony “products” and “instruments.”
The explanation is in the last paragraph of my prior message. Further, GATT requires all expenses be considered prior to profit. Thus, taxes come out before the owners get paid.
Do you or have you ever incorporated?