How Did Comprehensive Tax Reform Impact The United States?
As readers certainly will recall, the U.S. Congress passed comprehensive reform of the U.S. tax code in late 2017. The Tax Cuts and Jobs Act (TJCA) reduced both corporate and individual tax rates, and created a new structure for pass-through entities.
According to a new report from the Organization for Economic and Cooperative Development (OECD), that reform brought the United States’ tax-to-gross domestic product (GDP) ratio to the fourth lowest in the world, behind only Chile, Ireland, and Mexico. The U.S. rate stood at 24.3 percent in 2018, down from 26.8 percent in 2017. (The highest rate in the last 20 years in the United States was 28.3 percent in the year 2000.) The OECD average tax-to-GDP ratio was 34.4 percent in 2018.
The report also noted that the United States derives a “substantially higher” level of its revenues from taxes on personal income, profits and gains, property taxes, and goods and services taxes and a lower proportion of revenues from taxes on corporate income and gains and social security contributions.
The Metals Service Center Institute supported the 2017 bill. As our advocacy page states, “Establishing more competitive tax rates for small businesses, corporations and individuals will make the United States a more attractive place to invest, live and work. A stable, fairer tax system that encourages risk and investment will spur greater economic growth, which will produce higher revenues for the federal government.”