Today’s WSJ includes an article about U.S. corporate taxes that may surprise many:
"Our political class has managed to maintain America’s rank with the second highest corporate tax rate in the world at 39.3% (average combined federal and state)."
Why does this matter? Because not only does research show that higher corporate taxes suppress worker wages, it stunts economic growth more so than other major taxes:
"A new OECD study, "Taxes and Economic Growth," examines national tax burdens and their impact on growth and incomes in member countries. It concludes that "corporate taxes are most harmful for growth, followed by personal income taxes, and then consumption taxes." The study adds that "investment is adversely affected by corporate taxation," and that the most profitable and rapidly growing companies tend to be the most sensitive to high business tax rates."
There is a valuable lesson for North Carolina here. The Tar Heel State currently imposes the highest corporate tax rate in the southeast, as well as the highest top marginal income tax rate in the southeast. State lawmakers should take heed of the OECD study’s findings, because the same can be said whether discussing international – or interstate – competition.