A new study by Ernst & Young commissioned by the RATE coalition finds that the U.S. is losing ground to other nations because of our stubbornly high corporate tax rates (now highest among industrialized nations).
Some key findings include:
- The average statutory foreign corporate tax rate of the 19 countries analyzed will have fallen nearly 35 percent between 1988 and 2015, when all currently scheduled changes will be fully in effect.
- U.S. GDP is estimated to be between 1.2 percent and 2.0 percent smaller in 2013 because of the high U.S. corporate tax rate relative to the reductions in corporate tax rates enacted abroad beginning in 1988.
- In the long run, the U.S. economy, as measured by GDP, is estimated to be smaller by between 1.5 percent and 2.6 percent if the current differences in corporate tax rates remain.
- In today’s $15.7 trillion economy, the long run impact on the U.S. economy is equivalent to a reduction in U.S. GDP of about $235 billion to $345 billion each year.
- In 2013 real wages will be about 0.1 percent to 0.3 percent lower than they would have been otherwise.
- In the long-run, real wages would be about 1.0 percent to 1.2 percent lower than they would have been otherwise.
Far too many still insist on taxing corporations so they “pay their fair share.” But corporations don’t pay taxes, people pay taxes. And in the case of the corporate income tax, it is those folks on the margins of employment that are hurt by the lack of job opportunities due to uncompetitive taxes on businesses. Also, as I pointed out before, research also strongly indicates that higher corporate taxes suppress worker wages.
North Carolina has the highest corporate income tax rates in the southeast, which are tacked on top of the high federal corporate tax rates. No wonder we need to bribe companies to move here.