U.S. Has Second Highest Corporate Income Tax Rate on the Planet

By at 17 May, 2017, 3:16 pm

Damaging to Small Business Growth, Competitiveness and Investment

by Raymond J. Keating-

As the tax reform debate proceeds, it’s important to understand that the U.S. currently imposes one of the highest corporate income tax rates on the planet, and that rate affects small companies as well as large firms.

Consider some key points, based on numbers from KPMG’s database:

• As for top corporate income tax rates, the U.S. 40 percent tax rate (federal plus state average) ranks 170th among 171 nations this year. Only the United Arab Emirates imposes a higher rate (55 percent).

• The U.S. 40 percent corporate tax rate far outdistances the global average of 24.29 percent; the Americas average of 28.29 percent; the EU average of 21.51 percent; the Asia average of 21.28 percent; and the OECD average of 24.27 percent.

Those are stunning and distressing comparisons.

Again, let’s make this perfectly clear: Based on data covering 171 nations, the U.S. imposes the second highest corporate income tax rate.

Damaging to Small Business Competitiveness

Meanwhile, it is important to note that this is not simply a problem for big companies. Among corporations with employees in the U.S., according to the latest (2013) Census Bureau data:

• 86 percent of these businesses have less than 20 employees

• 96.7 percent less than 100 workers

• 99.1 percent fewer than 500 workers.

So, a high corporate tax burden very much hinders small and medium-size companies.

The need to provide substantial relief in terms of reducing the corporate tax rate is clear. Consider that if the rate were reduced to 15 percent, as proposed by the Trump administration, the U.S. would then be tied (with 11 other nations) for 25th among those 171 nations. That would be a breathtaking improvement in the nation’s competitive tax position, again, to the benefit of so many small businesses, and the U.S. economy in general.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.


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