The Case for Tax Reform

At RealClearMarkets Pinar Cebi Wilber makes the case for reforming the corporate income tax:

According to IRS data for 2013, there were close to 1.6 million corporations in the United States. We do not know the exact amount of taxes paid by each company, but we can rely on government and private calculations of effective tax rates paid by overall U.S. corporate businesses. A recent study by PricewaterhouseCoopers reviewed the ranks U.S. effective corporate tax rates against major competitors, including the European Union and OECD.

As the PwC study points out, the United States always ranks among the top four countries in terms of the highest effective corporate tax rate. According to the European Commission, in 2015 the U.S. had the second highest effective marginal tax rate among 35 countries, which included the European Union, Japan, Canada, and five other major economies.

The most recent government study, published by the Congressional Budget Office (CBO) in March 2017, also confirms the rank of the United States. Based on 2012 tax data, the CBO found that the United States had the highest statutory rate, third-highest average corporate tax rate, and fourth-highest effective corporate tax rate among the G20 countries.

Our high effective corporate tax rate provides an incentive for inversions, moving the headquarters of U. S. companies overseas via accounting gymnastics. That’s not good for U. S. workers.

If you don’t believe in lowering the corporate income tax rate so that we’re competitive with other OECD countries, please present your plan for discouraging inversions and explain how you’re going to get your plan through the House.

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