By Alan Joel ——Bio and Archives--September 17, 2014
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The accounting firm KPMG maintains a corporate tax table that includes more than 130 countries and only one has a higher overall corporate tax rate than the U.S. The United Arab Emirates' 55% rate is an exception, however, because it usually applies only to foreign oil companies.The other major concept besides competitiveness that shaped the overall index rankings is the concept of "neutrality". Neutrality is characterized as "a tax code that seeks to raise the most revenue with the fewest economic distortions. This means that it doesn't favor consumption over saving, as happens with capital gains and dividends taxes, estate taxes, and high progressive income taxes. This also means no targeted tax breaks for businesses for specific business activities." These various forms of taxation, as well as the massive crony capitalism enterprises widely seen in the United States, are found to "misallocate capital and reduce economic growth". This factored heavily into the low ranking that the United States received. The United States is falling behind around the world:
"Liberals argue that U.S. tax rates don't need to come down because they are already well below the level when Ronald Reagan came into office. But unlike the U.S., the world hasn't stood still. Reagan's tax-cutting example ignited a worldwide revolution that has seen waves of corporate tax-rate reductions. The U.S. last reduced the top marginal corporate income tax rate in 1986. But the Tax Foundation reports that other countries have reduced "the OECD average corporate tax rate from 47.5 percent in the early 1980s to around 25 percent today."This new index ranking should be a wake-up call and a springboard for discussion about much-needed tax reform. Our tax code is byzantine, our businesses are over-taxed, and our economy is continuing to suffer. We can do better. We have done better. We deserve better.
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Alan Joel has been a practicing CPA in NYC for more than 40 years. He loves liberty and writes on the politics of taxes at his popular blog, AlanJoelNY.com