FairTax Overview
40
35
Corporate Income Tax Rates in the OECD
30
Percentage
25
20
15
10
5
Switzerland
Ireland
Germany
Canada
Chile
Czech Republic
Hungary
Poland
Slovak Republic
Greece
Iceland
Slovenia
Turkey
Estonia
Luxembourg
Korea
Israel
Austria
Denmark
Portugal
Netherlands
Finland
United Kingdom
Sweden
Italy
New Zealand
Norway
Australia
Japan
Mexico
Spain
Belgium
France
United States
0
Source : 2011 OECD Tax Database
According to World Bank rankings, the U.S.' relative ranking on the "total tax cost" imposed on
businesses has gone from bad to worse, falling from 118th in 2010 to 124th in 2011. The total tax cost
expressed as a percent of before-tax profits is 46.8%.5 The U.S. effective corporate tax rate on new
investment was 34.6 percent in 2010, which was the highest rate in the OECD and the fifth-highest rate
among 83 countries. The average OECD rate was 18.6 percent, and the average rate for 83 countries was
17.7 percent.6
How did we arrive at this point? We arrived here because it appears that Congress would rather trade
influence in doling out special interests tax breaks that reduce the tax base and raise marginal rates than
hear the chorus of economists. In 1990, the Organization for Economic Co-operation and Development
(OECD) average statutory combined corporate tax rate was 41.1 percent, higher than the U.S.’ rate of
38.7 percent. But while other nations have been racing over the past few decades to slash corporate tax
rates to welcome multinational corporations, the U.S. has stagnated.
Lowering marginal tax rates is part of a revolution in economic policy that swept the globe during the
last two decades of the twentieth century. More than fifty nations significantly reduced their highest
marginal tax rates on individual income. The U.S. sat on the sidelines.
5
The World Bank, Paying Taxes in 2011: The Global Picture, Table 4.
Chen, D. and Mintz, J. "New Estimates of Effective Corporate Tax Rates on Business Investment." Tax and Budget
Bulletin, No. 64, February 2011.
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