U.S. corporate tax rate reportedly among highest in developed countries under Dems plan, study finds
The United States would have one of the highest corporate tax rates in the world under a Democratic proposal that would revise the country’s tax code to fund President Bidenambitious $ 3.5 trillion economic program.
The plan, unveiled in September by the House Ways and Means Committee, aims to generate an estimated $ 2 trillion over the next decade to fund programs that would expand Medicare, establish a free community college, provide time off. families paid and would fight against climate change.
The measure provides for a host of tax hikes, including an increase in the corporate tax rate to 26.5% for companies earning more than $ 5 million in revenue. The corporate rate would be lowered to 18% for small enterprises earn less than $ 400,000; all other companies would continue to pay the current rate of 21%.
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The Democrats’ proposal – though slightly lower than the 28% rate Biden campaigned on – would ultimately push the combined average state and federal corporate tax rate to 30.9%, according to a new analysis released by the Tax Foundation.
It would be the third highest corporate tax rate among 38 members of the Organization for Economic Co-operation and Development; only Portugal (31.5%) and Colombia (31%) would have higher rates.
Under current law, the United States is “in a straight line” with its OECD peers, according to the Tax Foundation.
“Coming back near the top of the OECD for corporate tax rates would be costly for several reasons: it would discourage investment and encourage companies to shift their profits and relocate elsewhere, which would lead to fewer opportunities jobs for Americans and less tax revenue for the US government. “, according to the analysis.
Hungary (9%), Chile (10%) and Ireland (12.5%) are among the OECD countries with the lowest corporate tax rates. Hungary and Ireland are resisting a separate push by G-7 leaders to impose a global minimum tax of at least 15% on foreign corporate profits.
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The Democrats’ tax proposal still faces a difficult path to passage: Moderate and progressive lawmakers are fighting for control in a tightly divided Congress, arguing over the size and scope of the partisan spending bill. Left-wing Democrats insist they will sink a $ 1 trillion bipartisan infrastructure bill unless it is explicitly tied to the larger spending proposal.
Centrists, however, have expressed skepticism about yet another multibillion-dollar bill – funded by a slew of new taxes on wealthy Americans and businesses, nothing less – after the coronavirus pandemic pushed the US deficit at an all time high.
Party members remain fiercely at odds over the price and specific political inclusions of the broad spending program.