February 28, 2015
HOW ABOUT ADDRESSING THE THRESHOLD QUESTION FIRST...:
Competing on Corporate Tax (Laura Tyson, 2/28/15, Project Syndicate)
The problem for the US is that developed and emerging economies have been slashing their rates, leaving the US - which had one of the developed world's lowest corporate tax rates after the 1986 tax reform - at a serious disadvantage.Most recently, the United Kingdom reduced its rate to 20%, half of the combined US federal and average state rates. And, since 2013, the UK has applied a special tax rate on income from patents, which will fall gradually to 10% by 2017. Twelve European Union countries currently have or are implementing similar special tax regimes, or "patent boxes," for income from intellectual property, which is taxed at rates of 5-15%.The US statutory corporate tax rate, at 39% in total, is more than 14 percentage points above the OECD average - making it the highest in the developed world. These differences affect corporate decisions about how much to invest, how to finance investment, and where to do business.The pro-growth rationale for a sizable reduction in the US rate has garnered bipartisan support - a rarity in today's Congress. Obama has proposed a rate of 28%, with a preferential rate of 25% for manufacturing, and additional special provisions to promote investment in research and development and clean energy.There is also bipartisan agreement that the foregone revenues from a rate reduction should be covered mainly by broadening the tax base - the same approach adopted in the 1986 tax reform. Broadening the base would also reduce the tax system's complexity and enhance its efficiency. But there remain deep fissures over which preferences should be eliminated and which activities currently outside the corporate tax base should be brought into it.
...why would we want to tax (stifle) business activity in the first place? Reducing the tax on some businesses so that we can tax more of them seems a particularly odd idea, spreading the mistake thinner but wider. Especially when the revenue will just go into general funds to be spent willy nilly.
MORE:
India slashes corporate tax rate by 5% as Jaitley envisions imminent double-digit growth (Jerin Mathew, 2/28/15, IB Times)
India has slashed corporate tax rate by 5%, as the country looks to become more business friendly under Narendra Modi.While presenting the federal budget for fiscal year 2015-16, Finance Minister Arun Jaitley announced that the country's corporate tax rate will be cut to 25% from 30% over four years.
Posted by Orrin Judd at February 28, 2015 6:54 AM
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