During negotiations regarding raising the nation’s debt limit, congressional Republicans have defended tax loopholes for corporations, claiming that America has a high corporate tax rate that is stifling economic growth and job creation. But the Center for Tax Justice (CTJ) has crunched the most recent data from the Organization for Economic Cooperation and Development (OECD), the Office of Management and Budget, and the Census Bureau, and finds that “the U.S. is already one of the least taxed countries for corporations in the developed world.”
As a share of GDP, the U.S. had the second lowest tax rate, behind only Iceland. This statistic flips on its head the often-repeated Republican charge that America has the second highest corporate tax rate in the world (which is only true on paper). In 2009, U.S. corporate taxes had fallen to only 1.3 percent of GDP, from 4 percent in 1965.
Conservatives love to point out that other OECD countries have lowered their corporate tax rates in recent years, but they conveniently ignore that “these countries have also closed corporate tax loopholes while the U.S. has expanded them.” As CAP Director for Tax and Budget Policy Michael Linden has noted, the U.S. is actually a very low-tax country across the board.
Recently, conservative commentator Bill Kristol chastised his own party for pretending that lowering the corporate tax rate is a cure-all for America’s economic woes. On Fox News Sunday, he interrupted a panelist who again tried to assert the U.S. is suffering from a high corporate tax rate: “Republicans are making a mistake if they focus on big businesses and corporate tax rates. Corporations have a ton of cash. The corporate tax rate is not killing big business in America.”
The GOP presidential candidates have almost uniformly introduced proposals to radically lower the U.S. corporate tax rate. For instance, former Minnesota Gov. Tim Pawlenty (R-MN) wants to reduce the corporate tax rate to 15 percent and eliminate all taxes on capital gains, dividends, interest income and inheritance. CTJ put the issue succinctly in a tweet this morning: “Dear US Corporations: You pay 2nd LOWEST tax rate in industrial world, so quit whining or move to Iceland.”