The corporate tax rate for American companies still stands at 39% if you include taxes at the state level — we still have the dubious distinction of leading the world when it comes to the highest business tax rates.
REAL REFORM: RATE Coalition Co-Chairs Elaine Kamarck and James Pinkerton published an OpEd this week zeroing in on the U.S. corporate tax rate. “To us,” they wrote, “there is a simple answer: Real tax reform starts with the rate. If you make that more competitive with the rest of the world, jobs, talent, intellectual property and multinational companies will beat a path back to America’s front door.” Thirty four U.S. companies and organizations make up theRATE Coalition, which advocates for sensible corporate tax reform.
MOVING FORWARD: Speaking to House and Senate Republicans gathered for their legislative retreat in Philadelphia,Speaker Paul Ryan “estimated [tax reform] would take from April through August, when lawmakers break for the summer.” Politico also reports that “Ryan said the tax package would be ‘revenue neutral,’ essentially paying for itself and not adding to the deficit. He dismissed the idea of a major tax cut that’s not paid for, one source said — comments that come as some Trump officials consider whether tax reform need not be offset by equivalent revenue increases or spending cuts. Ryan also said tax reform would mean ‘lower rates, broader base, upset lobbyists,’ according to sources present.”
CANADA BEGINS TO WORRY: With tax reform looming in the United States, some Canadians see their longtime edge over their neighbor to the south diminishing quite substantially. While Canadian Business columnist Kevin Milligan writes there is no reason for immediate concern because the U.S. legislative process can take quite a bit of time, he does paint the picture quite well: “Up to now, Canada has enjoyed a large advantage in corporate tax rates compared to the United States. This advantage has benefited Canada in many ways, like the incentive for multinational firms to book taxable profit here in Canada rather than in the United States as exemplified by the Burger King head-office move back in 2014. The current U.S. corporate tax rate is 35% federally (with state rates averaging around four percent more) while the Canadian rate is only 15% (with most provincial rates in the 11 to 12% range). Trump has talked about a plan that gets the U.S. corporate rate down by 20%. If that happens, the corporate tax advantage will shift, costing Canada both tax revenue and corporate investment.”
ANOTHER OPTION: Senator Mike Lee (R-UT) suggests eliminating the corporate tax entirely, replacing it with increased rates on dividends and capital gains. As reported in The Hill this week, Lee believes that “together, these two changes would transfer the workers’ share of the corporate tax onto American investors, who . . . are the natural and disproportionate beneficiaries of globalization relative to American workers.”
STATESIDE: States lowering their corporate income tax rates this year now number at seven. And, from New Hampshire to the District of Columbia, some states are making an effort to tie their rate decreases to statutory revenue targets. Per BNA, North Carolina is also trying this approach, lowering its rate from four percent to three percent at the start of 2017.
BUSINESS-FRIENDLY ENGLAND: Bloomberg columnist Mark Gilbert says the United Kingdom is not bluffing when it threatens to lower its corporate income tax rate after leaving the European Union. Already at 20 percent and heading to 19 percent in April, and 17 percent in 2020, Gilbert notes the electorate hasn’t exactly expressed much opposition to the trend, despite the dramatic worries from economists on the Continent. Gilbert also reminds us that “in the aftermath of the June Brexit plebiscite, the British media reported that Prime Minister Theresa May had warned her EU peers that a rate of 10 percent was possible if Britain’s post-EU deal wasn’t favorable. So when she said last week that ‘no deal is better than a bad deal,’ it’s clear that the threat of introducing the lowest tax rate in the EU is likely to feature in the negotiations.”
WE WANT TO KNOW: Can the 115th Congress and President Trump successfully tackle Tax Reform in 2017? Log on to our Facebook page and let us know what you think!
AND, REMEMBER THE RATE PLAN: The U.S. corporate tax rate is already the highest in the world, which is why we believe our plan to fix the tax code, to set the corporate tax rate at a globally competitive 25% or less, to close tax loopholes, to keep American companies in America, and to enable the U.S. economy to grow resulting in a higher standard of living for American workers is the best path forward.
CONTACT US: For questions or for additional resources, please contact Michael DiRoma of The RATE Coalition and QGA Public Affairs at email@example.com.