There is always much hand wringing about losing jobs to foreign countries, due to lower costs for labor, cheaper material costs, etc. However another major incentive to get out of Dodge is that the U.S. has a corporation-killing tax rate of 39.2%. As of right now that ranks 2nd in the world behind Japan, which stands at 39.5%. But Japan is slashing its Corporate Tax to 35% next month, making the U.S. the proud new title holder of this dubious distinction.
There’s a Friday Fun fact for all of you lovely folks.
Americans for Tax Reform has an interesting article discussing the Corporate Tax rates among our trading partners and cites Obama’s plan to lower the Corporate Tax to 32% in exchange for raising net taxes (which will tax U.S. companies foreign-based income). 32% is still far higher than almost every single one of our trade partners and well above the OECD (Organization for Economic Co-operation and Development) average for developed countries, which sits at 25%.
The American Spectator breaks this attack on foreign earnings down diligently, but in a nutshell, Obama wants to attack revenue for American companies that isn’t typically taxed, while slightly lowering our domestic rate. While on the surface it may seem like a good idea to some, in reality all this “tax cut” is doing is keeping the domestic Corporate Tax at a level that is far above competitive in comparison to other countries, while also adding on a major blow to revenues that are collected abroad. Thus, with a still-high domestic Corporate Tax, plus a new tax on foreign revenues that can greatly impact earnings, U.S.-based companies have even more incentive than ever to pick up and move.