About the Problem

High corporate taxes diminish investment and job creation in the countries where they occur. But by almost any measure, U.S. corporate taxes are higher than in other countries.

39.1%

 

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Taxes

About the Policy

Reduce the corporate tax rate to a level (e.g. 25%) that makes America more competitive with other countries. Pay for this reduction by eliminating special interest tax credits and deductions.

Public Support

62% of All Polled
55% of Democrats
71% of Republicans
61% of Independents

Polling data derived from three national surveys conducted by Cohen Research Group in February and March 2016. Each survey had a sample size of at least 1,000 registered voters with a margin of error of +/- 3.1%

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The United States currently has the highest corporate tax rate in the developed world, according to the OECD Tax Database.

In fact, the U.S. has maintained the highest corporate tax rate in the OECD since 2007. Even after adjusting for deductions, credits, and other measures, the average effective tax rate is still 27.9%, the second-highest among OECD countries.

We are also one of only six developed countries that has a worldwide business tax system, in which US companies pay taxes twice on foreign earnings: once in the country where the income is earned and once when the income is brought back to the U.S.

Our country’s high corporate tax rate and our antiquated worldwide taxation system diminishes investment and job creation, and stunts innovation and job growth.

The high corporate tax rate has led many U.S. companies to move overseas in a move commonly referred to as a ‘corporate inversion’. U.S. companies can reincorporate in a foreign country by either creating or buying-out a foreign parent company. The company can still retain all of its property, holdings, and employees in the U.S. but it pays taxes only in the foreign country that they have reincorporated to.

How do we solve this problem? To encourage companies to invest and create jobs in America, we should reduce the corporate tax rate to a level (25%) that makes America more competitive with other countries. This reduction can be paid for by eliminating special interest tax credits and deductions.

America should also replace its system of worldwide taxation with a “territorial” tax system, in which U.S. companies pay tax only on the income they earn in the U.S.