Source: NCPA
Raising U.S. corporate tax rates purely to generate tax revenue discourages investment, shrinks the economy, and hurts workers, according to a new report from the NCPA’s Tax Analysis Center.
“There is widespread agreement that the U.S. corporate income tax is punishingly high and that it perversely encourages U.S. corporations to keep their earnings locked up in countries where the tax is lower,” says Beacon Hill Institute Executive Director and NCPA Senior Fellow David Tuerck. “The best antidote to this problem is simply to abolish the tax outright.”
In the report, Tuerck and Beacon Hill Institute’s James Angelini provide a legal and economic analysis of the U.S. corporate income tax, finding that:
- The highest U.S. statutory rate is 35 percent; however, when combined with state corporate tax rates, the combined corporate tax rate is 39 percent – the highest among all other developed countries.
- Because of this, it is estimated that about $2 trillion in unrepatriated income is parked in other countries, an increase of 12 percent over 2013.
While policymakers on both sides agree U.S. corporate tax rates have become too high, agreement in principle is a far cry from agreement on details for reform. Tuerck and Angelini suggest abolishing the corporate tax, rather than attempting to reform it.
“There is no need to reform a tax that has no justification in the first place, on either equity or efficiency grounds,” adds Tuerck.