Tags: Corporate | Tax | Rates

Tax Policy Center: Corporate Tax Rates Must Come Down

Friday, 23 March 2012 08:02 AM

The United States is poised to have the world's highest corporate tax rates at 39.2 percent including state and local taxes, and that figure needs to fall if the nation wants to remain competitive, says Donald B. Marron, director of the Urban-Brookings Tax Policy Center.

"Corporate taxes are often more harmful for economic growth than ones on personal income or consumption, as noted in a recent study by the Organization for Economic Cooperation and Development," Marron writes in a Christian Science Monitor column.

"A high corporate rate is an invitation for U.S. multinationals to play games with their accounting, locating profits overseas while reporting as many tax-deductible expenses as possible here at home."

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes

President Barack Obama has proposed lowering corporate tax rates to 28 percent, while Republican frontrunner Mitt Romney favors 25 percent.

Lowering the rate isn't enough, Marron says, adding cuts alone will add to the country's deficits.

Lowering rates while streamlining the process and ending favoritism among different sectors would benefit both the government in search of revenue and corporations in search of clarity.

"The solution to all this is to reduce the corporate tax rate while taking a hatchet to many corporate tax breaks," Marron concludes.

"Done right, that would level the playing field across different businesses."

It would also encourage more companies to raise capital in equities markets as opposed to borrowing for tax reasons.

Congressman Ron Paul, a Wisconsin Republican, has proposed dropping the corporate tax rate to 25 percent from 35 percent and slashing taxes on profits made by U.S. companies overseas so they'll repatriate more back home.

The move is part of a broader Republican spending package aimed at narrowing the country's gaping deficits.

"We have a debt crisis coming," Ryan says, according to the National Journal.

"We know this. It's the most predictable crisis we have had in this country. We feel as leaders we have to do something about it. We have a legal obligation to pass a budget."

Editor's Note:The IRS’ Worst Nightmare — How to Pay Zero Taxes

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Friday, 23 March 2012 08:02 AM
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