Review of the Economic Research on the U.S. Corporate Tax Rate

Economists across the United States agree that the current tax structure for corporations is detrimental to the long-term economic health of the country. Unfortunately for business owners, the corporate tax rate in the U.S. exceeds the rate among the majority of peer countries around the world.

And yet, we find ourselves in a position where certain members of Congress want to increase the corporate tax rate – or are unwilling to fight to keep it down. If Congress were to increase the corporate tax rate, it would harm productivity, investment and wages – all of which are critical factors to economic growth and competitiveness on a global scale.

Over the last four decades, most developed countries have reduced their corporate tax rates from an average of 40% to the current worldwide average of 23.5%. This encourages economic growth and allows countries to better compete in global markets. Currently, the combined federal-state corporate tax rate is 25.8%, a competitive rate close to the world-wide average. And while the current rate in the U.S. is higher than the global average, there are ill-informed proponents of an increase that would raise the U.S. rate to one of the highest in the world.

They ignore the fact that corporations do not pay taxes and that the burden of the corporate tax falls on workers, consumers, and shareholders.

The RATE COALITION has reviewed the large body of economic studies on the benefits of a lower corporate rate and the negative effects of a higher one. These studies show the overwhelming evidence that the 21% corporate rate has been enormously successful in increasing investment, growth, wages, and U.S. global competitiveness.

Perhaps even more important is that these studies detail how raising the U.S. rate would be harmful to working families, American businesses, and the overall health of the country’s economy.