National Journal Whiffs on Corporate Tax Facts
In an otherwise fine effort to explain why the U.S. economy is not creating new jobs as fast as it used to, National Journal’s Jim Tankersley reports in the January 21st edition:
Some free-market economists say that we could encourage more domestic investment by cutting corporate tax rates, although it’s fair to note that the jobs breakdown of the 2000s coincided with hefty tax cuts under President Bush. Still, liberal and free-market analysts alike have argued for a sweeping reform of America’s corporate tax code—one that would reduce rates while eliminating many deductions and provisions that give companies incentives to spend their global profits outside the United States. More narrowly, groups such as the Association for Financial Professionals have urged Congress to lower America’s tax rates on repatriated income, to levels closer to international competitors.
First, in fairness to President Bush it should be noted that it was individual tax rates, not corporate ones, that were cut in the 2000s. Second, the United States already had very competitive individual tax rates before the 2001 and 2003 tax cuts, while the same is not true of the U.S. corporate tax rate. Throughout the 2000s the U.S. had one of the highest corporate tax rates in the developed world. And now that Japan has lowered its corporate taxes, the U.S. now has the highest corporate tax rate in the entire world. Finally, it is not that international competitors have lower tax rates on repatriated income than the U.S., most don’t tax income earned from foreign countries at all.