As Congress prepares to begin work on the tax bill, they should ignore any call to increase the corporate tax rate to raise more revenue. While Congressional Republicans recognize the many benefits of a lower corporate tax rate , some have actually said they may have gone too far in reducing the rate to 21%, and that raising the rate a few points would do no harm.
These Members are wrong. In fact, they may not have reduced the U.S. corporate rate enough. A new study by the Tax Foundation shows that the current U.S. rate is higher than the corporate tax rate in most European countries. And increasing the rate even a few points would reduce the competitive advantage of the U.S.
According to the Tax Foundation, the average corporate rate for 32 European countries is 21.5%, a rate 20% lower than the U.S. combined federal-state rate of 25.8%. Twenty-eight European countries have a corporate tax rate lower than the U.S. rate. Many have corporate rates between 10% and 20%. Increasing the U.S. rate to 25%, for a combined rate of nearly 30%, would tax American companies at a higher rate than every other European country but one.
Rather than raising the corporate rate, a lower corporate rate would unleash America’s economic power and increase our competitive advantage around the world. A lower rate would immediately make the U.S. an even more attractive place for global investment than it is today.
The Congressional Budget Office is projecting economic growth of only 1.8% a year for the next ten years, a dismal future of stagnant incomes, fewer jobs, and lost opportunities. The CBO expects business investment and corporate profits to decline, and wage growth to slow.
Congress should reject this gloomy outlook for a low growth future, and instead embrace a future of growth and innovation. The U.S. has the most innovative companies in the world, and adopting pro-growth tax policies would encourage even more investments in American innovation.
Congress should not be raising taxes on anyone. A lower corporate rate would boost productivity, leading to higher wages, better jobs, and greater opportunities for millions of Americans. The increased investment from a low corporate rate will lead to a stronger economy and a higher standard of living for all Americans.
Congress Should Ignore Calls to Raise the Corporate Tax Rate
March 13, 2025
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