Tags: corporate | tax | economic | income

High Corporate Tax Rates Hinder Economic Growth

By    |   Friday, 24 May 2013 07:54 AM

Corporate tax rates are higher than individual tax rates at virtually all levels of income. As a result, there is less incentive to invest in long-term, sustainable businesses.

Over the past few decades, lower levels of investment relative to gross domestic product have cut monetary velocity in half and stagnated employment and income growth.

Moreover, high corporate tax rates have reduced the incentive for corporations to bring oversees profits back to the United States for further investment. At the end of 2011, these profits totaled $1.6 trillion, according to Citizens for Tax Justice.

Repatriating these profits would generate greater investment, employment and income. In addition, it would generate hundreds of billions of dollars in tax revenue — roughly the amount collected annually in corporate tax revenue, according to the Bureau of Economic Analysis.

Preferential tax treatment of dividends and capital gains are not warranted given this low level of sustainable investment by these corporations. Unearned income is taxed approximately 15 percentage points less than earned income at all levels of income is and most of it is not subject to Social Security taxes.

To achieve long-term, stable economic growth, corporate tax rates need to be significantly lower than personal rates for all levels of income. Getting this right will be the key to our economic future.

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Corporate tax rates are higher than individual tax rates at virtually all levels of income. As a result, there is less incentive to invest in long-term, sustainable businesses.
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2013-54-24
Friday, 24 May 2013 07:54 AM
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