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InsiderOnline Blog: September 2012

U.S. Effective Marginal Tax Rates Are Also Uncompetitive

Since earlier this year, the United States has had the highest statutory corporate tax rate in the world, with an average federal-state rate of 39.2 percent [Tax Foundation, April 1]. That’s about 50 percent higher than the average for countries in the Organisation for Economic Cooperation and Development. The picture of an uncompetitive tax rate actually gets worse when you calculate marginal effective corporate tax rates, according to a new Cato Institute report. The marginal effective tax rate reflects the amount of tax actually paid after accounting for deductions. The United States has only the fourth highest marginal effective tax rate on new corporate investment, but that rate is almost double the OECD average, says Cato:

The U.S. [marginal effective corporate tax rate] is 35.6 percent in 2012, or almost twice the 90-country average of 18.2 percent. The average rate for the 34 Organization for Economic Cooperation and Development (OECD) nations is just 19.4 percent. [“Corporate Tax Competitiveness Rankings for 2012by Duanjie Chen and Jack Mintz, Cato Institute, September 2012.]

Posted on 09/25/12 06:23 PM by Alex Adrianson

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