Today, the Tax Foundation published the 2017 International Tax Competitiveness Index, which finds that the United States ranks 30th out of 35 OECD countries in tax competitiveness and tax neutrality. Specifically, the U.S. ranks 35th in corporate taxes. Given that the U.S. has not reduced its federal corporate tax rate from 35% since the early 1990s, Congress should lower this rate as soon as possible to encourage additional economic activity.
The United States also ranks 29th in property taxes, 25th in individual taxes, and 33rd in international tax rules. Although the U.S. does rank 4th in consumption taxes, its unnecessarily high corporate rate harms its overall ranking. The combined U.S. corporate tax rate (including state and local corporate taxes) is 39%, which is significantly higher than the OECD average of 25%.
Congress and state and local policymakers should address this issue by reducing corporate rates and simplifying the U.S. tax code. The Index says that a simple, competitive, and neutral tax code contains low marginal tax rates with few economic distortions and “promotes sustainable economic growth and investment while raising sufficient revenue for government priorities.” To avoid losing businesses and capital to countries with lower tax rates, the U.S. should reduce tax rates across the board.