An economic research study has found that the lower U.S. corporate tax rate enacted in 2017 has “significantly increased” America’s competitiveness over our global competitors. The study also found that America’s competitive advantage would disappear if President Biden’s proposed corporate tax rate increase was enacted.According to the research, US firms were at a real competitive disadvantage to our European competitors prior to the 2017 rate cut. The combined U.S. federal-state tax rate in 2017 was 38.9%, the highest corporate tax rate in the developed world, and significantly higher than the average rate of 23.8% paid by OECD countries.The House Ways and Means Committee report accompanying the Tax Cuts and Jobs Act said that the goal of the tax cut was to “promote economic growth and unleash the global competitiveness of America.” The lower corporate tax rate was necessary to insure that American businesses could be “globally competitive with their international competitors.”The study shows that the corporate rate cut worked. The bill reduced the corporate rate to 21%, resulting in an average rate of 25.8% for US businesses when combined with state and local taxes. The lower rate succeeded in improving the competitiveness of US firms, benefiting American businesses, workers, and families. Investment, wages, and economic growth all increased after the corporate rate was reduced.The study also examined the potential effects on U.S. competitiveness of an increase in the corporate rate as proposed by the Biden administration. The study found that the U.S. competitive advantage would “vanish” if the corporate rate was increased to 28%.The Biden plan would raise the combined average federal-state rate to 32.8%, once again the highest rate in the developed world. The new U.S. rate would be more than 50% higher than the average European corporate rate of 21.7%. Why would we want to do this?American workers and families suffer when US companies cannot compete with global competitors. Before the 2017 tax cut, wages were lower and American jobs were being shipped overseas. Since the corporate rate was lowered, US growth in real GDP has exceeded every other G-7 country, including France, Germany, and the United Kingdom.Our global competitors know that they are at a competitive disadvantage with the U.S., which is why they are pushing their global minimum tax scheme aimed at blunting America’s tax competitive advantage. American workers and families have benefited substantially from the 2017 rate cuts. Let’s not let our competitive advantage vanish by raising taxes on U S companies.
Evidence Shows Lower Tax Rates Boost U.S. Competitiveness
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