Republicans and Democrats on the Joint Select Committee on Deficit Reduction this week finally agreed on something substantive: The U.S. corporate tax rate is too high.
It’s a point we’ve been making for years at Heritage. High federal and state corporate tax rates — a whopping 39.2 percent when combined — make it difficult for U.S. businesses to compete internationally.
Over the past decade, other countries in the Organisation for Economic Co-operation and Development have reduced their corporate tax rates. As a result, the United States now rivals Japan for the highest. This chart illustrates how the average corporate tax rates of industrialized nations have dropped while the United States has actually increase to more than 39 percent.
The Joint Committee’s hearing about reforming the tax code took place Thursday and featured Thomas Barthold, chief of staff to the Joint Committee on Taxation. While lawmakers are still a long way from reaching consensus, even the panel’s Democrat co-chairman agreed something needed to be done.
“Most people do agree that such high tax rates make the United States a less attractive place in which to do business,” said Sen. Patty Murray (D-WA), according to Bloomberg. “Instead of making and improving their widgets or hiring new people,” she said, businesses “spend too much time and effort devising business strategies aimed simply at tax avoidance.”
For more infographics like this one, see Heritage’s 2011 Budget Chart Book, a user-friendly way to learn about the federal budget through pictures.
Source material can be found at this site.