Report Adds Weight To Calls For Corporate Tax Cuts In US

by Mike Godfrey, Tax-News.com, Washington

24 October 2001

A study just released by the Tax Foundation in the United States has added weight to Republican calls for a reduction in the corporate tax rate in order to stimulate the country's ailing economy.

According to the Chief Economist of the Tax Foundation and author of 'The Corporate Tax Burden', John S. Barry, a reduction in tax on corporations would benefit all US citizens, and would increase consumer confidence and spending.

'Every dollar in taxes paid by American business actually comes out of the pockets of customers, employees, and shareholders- all of whom need a boost right now,' he explained. However, within the report itself, this is expressed a little more bluntly: 'The corporate income tax is one of the most burdensome and economically inefficient taxes in the code. Fundamental reform of the corporate income tax deserves heightened attention given the current economic downturn.'

The study examines the instability inflicted on the US business sector by corporate income tax over the past thirty years, which are described by Mr Barry as 'a rollercoaster ride'. It also reveals that there had been an inflation adjusted increase of 78.8% in corporate income tax collections between 1992 and 2000, and that federal collections were estimated to be around $200 billion for the last fiscal year.

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