The RATE (Reforming America’s Taxes Equitably) Coalition, whose members include AT&T, Boeing, FedEx and Nike, argues that the US tax code, and specifically the 35% corporate tax rate, is too complex, too high and too uncompetitive.
“It’s too complicated and it’s too high,” said RATE Coalition chairwoman Elaine Kamarck. “On April 1, when Japan is scheduled to lower its corporate tax rate, the US is going to have the highest corporate tax rate in the world.”
To evidence the complexity, RATE cites a World Bank report that ranks the US 62nd (tied with Uganda) on a list of countries by ease of paying taxes.
There is widespread agreement that the US tax rate is too high and the system unsatisfactory.
“Families, businesses, and policymakers are increasingly frustrated by the complexity, inefficiency, and inequity of America’s federal tax system,” said the non-partisan Tax Policy Center.
Coupled with this general feeling, RATE points to the fact that the US has the second highest corporate tax rate in the world, and will soon have the highest.
Excluding the US, the OECD combined average statutory corporate tax rate has fallen from 39% to 25.1% since 1992. In contrast, the US combined statutory rate has remained at around 39% since 1993.
RATE claims that a lower corporate tax rate will promote American competitiveness, increase incentives for companies to invest and create jobs in the US, and Doug Stransky, partner at Sullivan & Worcester, agrees. The present rate distorts business decisions and forces tax directors to spend resources trying to access loopholes, said Kamarck.
“The single most important long-term tax change Congress and the President could make to stimulate a listless economy would be to reduce the corporate tax rate,” Stransky said.
“In 2008, Germany cut its rate from 38.9% to 30.18%. Since that time, they have had the fastest growth rate in Europe,” he added. “Last year, Japan announced plans to reduce its corporate tax rate from 40% to 35%. The Japanese Trade Ministry estimates the move will increase GDP by 2.6% over the next three years.”
Reform will not come pre-election, but businesses will expect a reduction almost immediately after, especially given that there is bi-partisan support for the cut.
Click here to read what the Republican presidential candidates would do to the US corporate tax rate.
