Why Does The United States Need Tax Reform? Take A Look At Where It Ranks Globally!
Tax Day was April 18, so American businesses and families don’t need to be reminded of how confusing and complex the U.S. tax code is. But did you know that the United States also has one of the highest corporate tax rates in the world and that the rates many American small businesses pay also are comparatively high? According to a new study by the Tax Foundation:
- Among 43 nations surveyed, the United States has the second highest statutory corporate income tax rate at 39.1 percent.
- The United States is one of a very small group of countries that has not reduced its statutory corporate tax rate in the past seven years.
- At 34.8 percent, the U.S. tax burden on new investment, called the marginal effective tax rate (METR), is fifth highest among the 43 nations surveyed. (The average METR among developed nations is 19.2 percent.)
- A reduction in the corporate income tax rate in Canada in 2000 led to increased investment and faster growth in both gross domestic product and national income and did not result in a significant loss in corporate income tax revenue.
The Tax Foundation also found:
- The U.S. House Ways and Means Committee “Blueprint” for tax reform would convert the corporate income tax into a “destination-based cash-flow tax” and would reduce the corporate income tax rate to 20 percent and the METR on new investment to 16.1 percent.
- A proposal advanced by the Trump administration would reduce the statutory corporate tax rate to 15 percent and the METR on new investment in the United States to 21.4 percent.
The high rates that U.S. corporations currently pay, along with high rates on pass-through companies, is why the Metals Service Center Institute (MSCI) is fighting for comprehensive federal tax reform. The U.S. House Ways and Means Committee could soon start deliberations on tax reform so stay tuned to Connecting the Dots in the coming weeks for more information. In the meantime, check out MSCI’s advocacy page for a full explanation of the organization’s position on federal tax reform.