Are US corporations feeding at the trough of low taxes?
Not if you believe the figures from a University of Calgary – C.D. Howe Institute study comparing tax rates in 80 countries – remember, they’re Canadians (hat tip Stephen Gordon). In this list, which includes all the major economies, the U.S. ranks in 3rd place for the highest corporate tax rate for advanced economies (I didn’t include Chad on that list).
Am I saying we should lower taxes? No. The U.S. Government needs more income, not less. The same argument holds in the UK, although less so, as tax rates are lower for UK corporates (11th amongst advanced economies). But, when populists tell you that corporations are not paying their fair share, you have to be skeptical.
So when this housing bust has John McCain or Barack Obama and Gordon Brown dialing for dollars because of the gaping hole in American and British public finances, corporations may not be the best place to call ad get the cash.
Source
2007 Tax Competitiveness Report, C.D. Howe Institute (pdf)
“when populists tell you that corporations are not paying their fair share, you have to be skeptical”
I think this argument is not directly aimed at the headline level of tax, but at the many schemes employed to avoid it. Many corporations use offshore vehicles, or exploit various programmes available to offset tax. Typically when a country has higher tax rates, there will be more elaborate measures taken to avoid them.
“Many corporations use offshore vehicles, or exploit various programmes available to offset tax.”
That’s spot on. Labour are pressuring Brown to enact a Windfall Profit Scheme against big oil. The truth is windfall taxes are rubbish.
https://pro.creditwritedowns.com/2008/04/windfall-profit-tax-bad-idea.html
What Brown needs to do is close those loopholes that corporations use to lower their tax, especially big oil. Tax avoidance is natural. But, we do want everyone to pay their fair share.
Shut down the schemes and forget about the Windfall Profits Tax.