The United States needs to reform its corporate tax rate to generate more jobs and economic growth, said Duanjie Chen and Jack Mintz in a Cato Institute report.
“The U.S. corporate tax system has become unwieldy, inconsistent with world practice, and highly anti-competitive,” Chen and Mintz said in the report.
The U.S. corporate tax rate is 40 percent and one of the highest in the world, Chen and Mintz said.
While other countries are lowering their rates, America’s tax system has made no steps to improve the business climate, The Wall Street Journal reported.
“The excessively high U.S. corporate tax rate reduces economic growth by discouraging both domestic capital formation and inward foreign direct investment," Chen and Mintz said.
"Less investment means slower wage growth and reduced living standards over the long run.”
The United States is part of the Organization for Economic Cooperation and Development, which has seen 27 out of 30 nations reduce their corporate tax rate since 2000.
By lowering their rates, the countries have benefited because “capital investment has grown and corporate tax revenues as a share of gross domestic product has risen in many countries as reported profits have increased,” the Cato report said.
The U.S. needs to lower its combined federal-state corporate income tax rate to “25 percent or less to increase capital investment and attract more reported profits to the United States. The government would lose little if any revenue from such a cut over the long run,” Chen and Mintz said.
The U.S. corporate tax rate “is extremely negative for business. This leads to companies leaving for somewhere else. They expand and create more jobs for other countries,” said Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University, the Orange County Register reported.
© 2017 Newsmax Finance. All rights reserved.