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1 Scott A. Hodge, U.S. States Lead the World in High Corporate Taxes 1 (2008)

handle is hein.taxfoundation/ffbbjxz0001 and id is 1 raw text is: FOUNDATION U.S. States Lead the World in High Corporate Taxes Fiscal Fact No. 119 by Scott A. Hodge March 18, 2008 America's political leadership is finally waking up to the fact that the tax rates businesses face in the U.S. are way out of step with our major economic competitors. Last year, for example, Ways and Means Chairman Charles Rangel proposed cutting the federal corporate tax rate from 35 percent to 30.5 percent. While a 5 percentage point cut in the federal corporate tax rate may sound significant, it may not be sufficient to meaningfully improve the competitiveness of the United States. Currently, the average combined federal and state corporate tax rate in the U.S. is 39.3 percent, second among OECD countries to Japan's combined rate of 39.5 percent.' Lowering the federal rate to 30.5 percent would only lower the U.S.'s ranking to fifth highest among industrialized countries. More recently, other members of Congress-including Sen. John McCain and Congressman Eric Cantor-have released proposals to cut the corporate rate even deeper to 25 percent. While this lower rate would improve the U.S.'s international ranking and competitiveness, that improvement would be mitigated by the high corporate tax rates imposed by many states. Many states impose state corporate income taxes at rates above the national average of 6.6 percent. Iowa, for example, imposes the highest corporate tax rate of 12 percent, followed by Pennsylvania's 9.99 percent rate and Minnesota's 9.8 percent rate. When added to the federal rate, these states tax their businesses at rates far in excess of all other OECD countries. When compared to other OECD countries: * 24 U.S. states have a combined corporate tax rate higher than top-ranked Japan. * 32 states have a combined corporate tax rate higher than third-ranked Germany. * 46 states have a combined corporate tax rate higher than fourth-ranked Canada. * All 50 states have a combined corporate tax rate higher than fifth-ranked France.

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