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U.S. to have Highest Corporate Tax Rate in the World
heritage foundation ^ | 12/15/2010 | Curtis Dubay

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 ...


TOPICS: Business/Economy; Foreign Affairs; Front Page News; News/Current Events
KEYWORDS:

1 posted on 07/17/2012 4:02:53 AM PDT by tobyhill
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To: tobyhill
It's weird that U.S. corporations keep offshoring. I wonder why.

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.

2 posted on 07/17/2012 4:07:13 AM PDT by Sirius Lee (Goode over evil. Voting for mitt or obie is like throwing your country away.)
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To: tobyhill

C’mon. There are Soviet Union and East Germany to beat. None of them around anymore? Nevermind!


3 posted on 07/17/2012 4:08:14 AM PDT by cunning_fish (.)
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To: tobyhill

Bump


4 posted on 07/17/2012 4:12:28 AM PDT by lowbridge (Joe Biden: "Look, the Taliban per se is not our enemy.")
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To: All
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.

5 posted on 07/17/2012 4:14:49 AM PDT by tobyhill (Defund Obamacare Now)
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To: tobyhill

” U.S. to have Highest Corporate Tax Rate in the World “

http://www.freerepublic.com/focus/f-news/2907384/posts

Canadians Richer Than Americans For First Time In History


Coincidence??


6 posted on 07/17/2012 4:14:57 AM PDT by Uncle Ike (Rope is cheap, and there are lots of trees...)
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To: tobyhill

Excellent comrades, excellent!!!

/s/


7 posted on 07/17/2012 4:15:29 AM PDT by ripley
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To: tobyhill

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.


8 posted on 07/17/2012 4:23:15 AM PDT by rod1 (CTLY)
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To: cunning_fish

FYI -

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%.

http://www.worldwide-tax.com/russia/russia_tax.asp


9 posted on 07/17/2012 4:23:15 AM PDT by sergeantdave (Public unions exist to protect the unions from the taxpaying public)
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To: tobyhill

Not to worry.. Americans do not create their own businesses.


10 posted on 07/17/2012 4:45:24 AM PDT by Leep (Enemy of the StatistI)
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To: tobyhill
Precisely, corporations, in effect, don't pay any taxes no matter what the rate is. They simply pass on any costs to their customers, their employees through lower compensation, or to their shareholders.

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.

11 posted on 07/17/2012 4:55:10 AM PDT by Former Proud Canadian (Obamanomics-We don't need your stinking tar sands oil, we'll just grow algae.)
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To: Former Proud Canadian
I'm not so sure this is true. A tax is not a "cost of doing business" at all. It's applied to the profits that are earned after a company's revenues and costs are computed. There's nothing to "pass on to customers" at all.

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.

12 posted on 07/17/2012 5:06:29 AM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: tobyhill
Keep in mind that while the corporations actually pay the tax, they will just pass the cost to the consumer.

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.

13 posted on 07/17/2012 5:07:17 AM PDT by Carry_Okie (The Slave Party Switcheroo: Economic crisis! Zero's eligibility Trumped!! Hillary 2012!!!)
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To: Sirius Lee

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.


14 posted on 07/17/2012 5:44:41 AM PDT by 1010RD (First, Do No Harm)
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To: tobyhill

There is only ONE country on this graph/table whose CIT is going up.

15 posted on 07/17/2012 5:45:30 AM PDT by Right Wing Assault (Dick Obama is more inexperienced now than he was before he was elected.)
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To: sergeantdave

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.


16 posted on 07/17/2012 7:14:49 AM PDT by Thunder90 (Kick Obama out of the White House in 2012.)
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To: Alberta's Child
Profits aren't just an abstract number. They fuel the growth of a company, or attract/retain investors.

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.

17 posted on 07/17/2012 8:20:38 AM PDT by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: Alberta's Child

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)

– Tax expense
= 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.


18 posted on 07/17/2012 9:12:49 AM PDT by taxcontrol
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To: tobyhill

‘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.


19 posted on 07/17/2012 10:06:04 AM PDT by AlmaKing
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To: tobyhill
WE'RE #1 WE'RE #1

/s

20 posted on 07/17/2012 11:06:52 AM PDT by Repeat Offender (Why do cops have more lenient ROEs when facing us than troops in combat facing suicidal islamists?)
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To: 1010RD
The corporate tax rate should be 0%. Let that revenue pass through to the owners/stockholders, etc. A corporation is people.

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.

21 posted on 07/17/2012 2:31:33 PM PDT by Sirius Lee (Goode over evil. Voting for mitt or obie is like throwing your country away.)
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To: tobyhill

As bad as the corp marginal rates are here, thank our lucky stars we do not have a VAT. VAT’s are pure evil.


22 posted on 07/17/2012 2:35:10 PM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
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To: taxcontrol

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.”


23 posted on 07/17/2012 2:36:24 PM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: justlurking
I agree with everything you've said there. I don't see anything that contradicts what I've posted on this thread.

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.

24 posted on 07/17/2012 3:00:38 PM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Alberta's Child
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.”

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.

25 posted on 07/17/2012 4:16:50 PM PDT by supercat (Renounce Covetousness.)
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To: Alberta's Child
Interestingly, there are many common U.S. business practices that are driven by U.S. tax law more than anything else.

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.

26 posted on 07/17/2012 4:22:34 PM PDT by supercat (Renounce Covetousness.)
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To: supercat

Just wait until Phony-Care kicks in full tentacles. Year by year leverage and all. Along with all their Phony “products” and “instruments.”


27 posted on 07/17/2012 4:27:39 PM PDT by Varsity Flight (Phony-Care is the Government Work-Camp: Arbeitsziehungslager)
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To: Alberta's Child

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.


28 posted on 07/18/2012 7:16:13 AM PDT by taxcontrol
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To: Sirius Lee

Do you or have you ever incorporated?


29 posted on 07/20/2012 2:27:13 AM PDT by 1010RD (First, Do No Harm)
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