An expert on federal and state tax says the U.S. continues to
shoot itself in the foot with its high corporate-tax climate.
Chris Edwards is director of tax policy studies at the Cato Institute. He
says the current legal corporate tax rate of nearly 40 percent is
higher than every country in Europe and every industrialized
country around, and that is only part of the problem.
"People point out that with the legal rate or statutory rate,
corporations take advantage of lots of loopholes so the actual
amount of tax they pay is lower than the legal or statutory rate,
which is sometimes true," Edwards notes.
"But the new study from the Cato Institute shows that, of 90
countries, the United States has the fourth highest effective
corporate tax rate in the world at about 36 percent."
When it comes to companies looking to move or build new
operations, some experts on the matter argue that no one can blame
a company for looking at Ireland, Canada, and other nations with
much lower corporate tax rates. Edwards agrees with that
"When you're talking about Intel or Caterpillar or General
Electric, they have global operations," he tells OneNewsNow. "They
not only sell stuff in just about every country of the world, they
make stuff in other countries as well. When, say, Intel builds a
new semiconductor plant, they're going to look around where they
can find smart people, but also where they can find the best
financial condition, with the lowest taxes.
Edwards adds that it is not just U.S. companies that need to be
"You may have to think about foreign companies. When Daimler
Corporation builds a new automobile plant, we want them to build
that plant in the United States and not Canada or Mexico," he
points out. "We have to be thinking about keeping American
companies investing at home and attracting foreign multi-national
companies to invest here in the United States as well."
Edwards and Cato believe the U.S. should maintain a tax rate
that matches that of countries that are competing with the U.S. for
"The average of the major industrial countries in the world now
is just 25 percent, so I think we ought to slash our rate to match
the competition," Edwards declares. "Frankly, we should go further.
We are shooting ourselves in the foot with this high corporate-tax
The new study is available at the Cato website.