America Takes Dubious First-Place Honors: Highest Corporate Tax Rate

By: Nancy Smith | Posted: April 2, 2012 3:55 AM
 U.S. Senate Republican Committee
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 or at (850) 727-0859.

Comments (8)

2:55PM APR 25TH 2012
Take away all loopholes and make it !5%.....then watch what happens!
Pat Galbraith
6:23AM APR 3RD 2012
A bit of heresy coming. Corporation, businesses of any kind, do not now pay, nor have they ever paid, taxes. Ludicrous? Think. For a business to have any funds to pay for anything, rent, wages, utilities and those taxes, first they must sell goods or services. And to who do they sell? Customers. And what are customers? Look in a mirror. You and I pay those taxes - the ones you see and a myriad of taxes hidden in the price of everything you buy. And this should really make you warm ad cuddly. You now get to pay sales tax on the taxes you just paid. Think about it.

The solution - obvious to DC - is to increase those taxes. Instead, consider a system where there would be no - NO - deductions. Consider the FairTax.
Tragic Consequences
12:24AM APR 3RD 2012
Nancy, you are being disingenuous and you know it. You know several large US corps, like GE, pay NO tax, ZERO. According to Yahoo finance, "Last year, 19 of the 30 companies in the Dow Jones Industrial Average paid an effective tax rate below the 28% level President Obama has proposed, Reuters reports.

And while a lot of attention was given to whether General Electric paid any taxes or not, Reuters notes that AT&T (T), Bank of America (BAC) and Travelers (TRV) each posted tax gains in 2011 (meaning they got the corporate equivalent of a refund) while Verizon (VZ) paid an effective rate of just 2.7%.

The Yahoo Finance article goes on to say, "With U.S. corporate profits margins near record levels, and corporations sitting on approximately $1 trillion in cash -- much of its parked overseas to avoid U.S. taxes -- is it really credible to say taxes are holding back American industry?
Given the high levels of profitability and cash on corporate balance sheets already, is there any reason to think lower rates would really result in more hiring and investment in America?

In an era of rising income inequality and increasing populist rhetoric, is it really good politics to give corporations another break?"

Please don't lie. It sets a bad example.
Fed Up
4:59PM APR 2ND 2012
Here's the federal tax rates for regular (C) corporates based on net taxable income:
$0 to $50k = 15%
$50k to 75k = 25%
$75k to $100k = 34%
$100k to $335k = 39%
$335k to $10mil = 34%
$10mil to $15mil = 35%
$15mil to $18.3mil = 38%
18.3mil and up = 34%

The federal corporate tax laws are necessarily biased against small growing businesses. Between the hard-hitting tax rates and the industry-specific tax credits and exemptions, the small businesses are the ones who bear the largest tax burden - including the payroll taxes.

The majority of the small businesses are hit with the highest federal tax rate - especially in their expanding years. The large businesses are able to pay for lobbyists to get their TYPE of Research & Development either written off in full or paid by the taxpayers directly. Small businesses are punished with less write offs (and MORE regulations) when they try to expand their businesses with capital expenditures on fixed assets.

Without a healthy economy based on small businesses, the majority of people in our nation will continue the spiral down into poverty levels.
10:21AM APR 2ND 2012
Sigh, not all together true, highest stated rate, yes, highest average paid by corps,no. And that is the problem, when really big corps have the influence over legislation where they are able to avoid paying, while their direct competitors or other industries pay much more, and only a vey few pay the stated rate , that is the real problem. Ms Smith, once again, lets ideaology trump the truth, providing only a narrow and contrived part of the whole story.
Fed Up
5:29PM APR 2ND 2012
Crony corporatism is well practiced by the members of both parties and has been practiced for decades.

Sometimes it is giving tax credits to the movie industry for filming within the US. Sometimes it is taxpayers' subsidizing Research and Development (where the company keeps the patents' and royalty rights). Sometimes it is giving a special industry a lower tax rate as when the hedge fund managers received a mere 5% tax rate.
11:41AM APR 2ND 2012
wawoo you are such a good dem. we had better not be alarmed in the united states i guess. always enjoy your comments, man. so, all we have to do is ... what? oh wait, i know! all we have to do is elect democrats who will fix our system so that big corporations will stop influencing congress? wawoo you are too too.
12:25PM APR 2ND 2012
Judging by your reply, I'm assuming wawoo is right because otherwise you would have countered with something of substance- instead of wah, wah, wah the Democrats are doing it too..... Lol

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