America Takes Dubious First-Place Honors: Highest Corporate Tax Rate
Around the State
Overnight, the United States of America laid claim to a top spot it didn't want -- "the highest jobs-killing corporate tax rate in the indistrialized world," 39.2 percent.
Unfortunately, says a key member of the Business Roundtable, we're No. 1.
It happened Sunday, when Japan cut its rate to 36.8 percent. What to do about it now, how to get back in the competitive mix to keep the U.S. a leader in the worldwide economy -- that's a top priority for economists the country over -- but particularly for the Business Roundtable.
The Roundtable has what it calls a "tax madness campaign" under way, for no other reason than to get America to focus on its overwhelming corporate tax disadvantage.
Business Roundtable is a politically conservative group of chief executive officers of major U.S. corporations. It was formed in 1972 to promote pro-business public policy and protect against a growing hostility toward America's largest corporations -- a climate prevalent particularly among labor unions at the time.
Joel R. Carron, an assistant within BRT's management team, told Sunshine State News Friday that President Barack Obama's plan to cut the corporate tax rate to 28 percent "sounds good on the surface, but it's going to create $350 billion in new, offsetting taxes."
Republicans, on the other hand, talk about a 25 percent cut, but they are immersed in the election and aren't concentrating, Carron said. He said the Business Roundtable "wants a clean cut in corporate tax rates to 'goose' job growth and industrial reinvestment."
Said Carron, "What you've got to love is how the United Kingdom gets it. They just cut their tax rate. Now their Parliament is overjoyed."
On March 21, UK Chancellor of the Exchequer George Osborne announced an expedited reduction of the country's corporate tax rate to 24 percent as of April 1. The rationale? To improve Britain's global competitiveness, says the BRT.
Here's what the chancellor said in his announcement:
"[The] headline rate of corporation tax remains the most visible sign of how competitive our country is. We’ve already cut the rate from 28 percent to 26 percent. This April it is due to fall again to 25 percent. I can announce today a further cut of 1 percent -- to be implemented right away.
"From next month, Britain will have a corporation tax rate of just 24 percent. And we will continue with the two further cuts planned next year and the year after. So that by 2014, Britain will have a 22 percent rate of corporation tax. The biggest sustained reduction in business tax rates for a generation.
"A headline rate that is not just lower than our competitors, but dramatically lower. Eighteen percent lower than the U.S. Sixteen percent lower than Japan. Twelve percent below France and 8 percent below Germany. An advertisement for investment and jobs in Britain. And a rate that puts our country within sight of a 20 percent rate of business tax that would align basic rate income tax, the small companies' rate and the corporation tax rate."
The London Evening Standard had high praise for the chancellor's strategy. According to the article, "The chancellor had set out his plans in last year’s budget to reduce the main company tax from 28 percent to 23 percent by 2014 to attract more businesses to the U.K., prevent others moving to cheaper tax havens and encourage those who have moved to return home."
Meanwhile, Carter Wood, senior communications adviser at Business Roundtable, admitted in BRT's blog report, "Good, reasoned, globally minded economic policy in the United Kingdom, meant to benefit British citizens through investment, economic growth and increased tax revenues."
But, he said, what do we have here in the U.S. instead? "Seems like tax madness," he said, "hence Business Roundtable's 'tax madness' campaign to point out the competitive folly of having the world's highest rate."
Incidentally, state corporate taxes are added onto the federal tax. In fact, Florida is one of the few states this year to reduce its corporate income tax. Though Gov. Rick Scott was forced to settle for a much smaller cut than he wanted, this year's change will reduce the number of Florida businesses that have to pay the tax by increasing the amount of income exempt from $25,000 to $50,000.
Reach Nancy Smith at email@example.com or at (850) 727-0859.