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Wednesday, June 23, 2010

U.S. to be Saddled with Highest Corporate Income Tax Rate

Currently, the U.S has the second highest corporate income tax rate among major developed nations. But it looks like we’ll soon have, unfortunately, the highest tax rate.

As the Wall Street Journal noted late last week, Japan’s new prime minister, Naoto Kan, is looking to reduce nation’s corporate tax rate, which reaches almost 40%. The target is to reduce the tax rate in stages to levels in other nations, noting that the average rate for OECD nations stands at 26%.

The newspaper noted that the government’s growth plan stated that a rate cut would “strengthen the competitiveness of companies based in Japan and encourage investments by foreign companies.”

That’s spot on.

However, later in the same report, it was noted that Kan has called for doubling the nation’s 5% sales tax, and that economists are expecting an increase in the personal income tax.

One step forward, two steps back in Japan, it seems.

Meanwhile, in the U.S., it’s nothing but moving backwards.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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