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1 Scott A. Hodge, The Economic Effects of Adopting the Corporate Tax Rates of the OECD, the UK, and Canada 1 (2015)

handle is hein.taxfoundation/ecefcptaxr0001 and id is 1 raw text is: TAX The Economic Effects of Adopting the FOUNDTiON FOUNATN Corporate Tax Rates of the OECD, the FISCAL FACT UK, and Canada Aug. 2015 No. 477 By Scott A. Hodge President Key Findings Using the Tax Foundation's Taxes and Growth (TAG) Model, this paper simulates both the economic benefits and budgetary costs of a cut in the corporate income tax rate from the current 35 percent to the OECD average corporate income tax rate of 25 percent, the current UK corporate income tax rate of 20 percent, and the Canadian federal corporate tax rate of 15 percent. A reduction in the corporate income tax rate to 25 percent would increase the size of GDP by 2.3 percent at the end of the adjustment period. A further cut to 20 percent would boost long-term GDP by 3.3 percent. A cut to the Canadian federal corporate income tax rate of 15 percent would have the largest impact, increasing GDP by 4.3 percent over the long-term. Workers would also benefit from a corporate rate reduction. Depending on the size of the corporate rate reduction, we would expect to see an additional 425,000 to 613,000 new jobs, and wages would increase by between 1.9 percent and 3.6 percent over the long-term. Regardless the size of the corporate tax cut, the larger GDP would translate into higher after-tax incomes for taxpayers up and down the income scale. The Tax Foundation is a 501(c)(3) non-partisan, non-profit research institution founded in 1937 to educate the public on tax policy. Based in Washington, D.C. our economic and policy analysis is guided by the principles of sound tax policy: simplicity, neutrality, transparency, and stability. (02015 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Melodie Bowler Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 Using conventional scoring, these three corporate tax cuts to 25, 20, and 15 percent would cost $1.2, $1.8, and $2.5 trillion over the next ten years. However, using the more realistic assumption that these cuts would increase the size of GDP, their costs would be closer to $746 billion, $1.1 trillion, and $1.5 trillion over the next decade. taxfoundation org

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