A new study by the Organization for Economic Cooperation and Development has shown that the United States is effectively moving backwards in terms of corporate tax competitiveness with its continued failure to lower rates.
The OECD study shows that for the 17th consecutive year, the average rate of corporate taxes in non-US countries fell while the US corporate tax rate stayed the same.
As a result of the US failure to lower its corporate tax rate for more than two decades while other major trading nations lowered theirs, the US corporate tax rate is now 50% higher than the OECD average. Nine key trading partners cut their rates during 2007.
"Continued failure by US tax policymakers to keep up with our top global economic competitors means that we're solidifying a trend that will result in our children and grandchildren not seeing the economic growth we've seen in our lifetimes," stated Scott Hodge, President of the Tax Foundation in the organization's latest Fiscal Fact, released on Wednesday in response to the OECD report.
"There's a real-wallet impact for Americans as we continue to sit idly by while other countries improve the way they do business, and we should be very concerned about jobs, capital, and investments moving from high-tax countries to low-tax countries," Hodge warned.
According to the Tax Foundation, the latest report comes on the heels of another recent OECD study showing that corporate taxes are the single most harmful tax to GDP growth, more so than personal income taxes or consumption taxes.
The combined federal and state corporate tax rate in the US currently stands at 39.3% - the second-highest among industrialized countries - while the OECD average rate has fallen to 26.6%.
Even China has recognized the significance of cutting the corporate tax to become more competitive, reducing their top standard corporate tax rate from 33% to 25% just this year, the Tax Foundation noted.
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