In his State of the Union Speech this January, President Obama pledged to fix the high corporate tax rates that have helped drive manufacturing jobs overseas.
-from "Tax Rates for a Small Planet," a recent research report from AIER.
The report states that the last tax reduction in the corporate income tax was in 1986, when Congress reduced it to 35%. We had a relative advantage over other countries for awhile. Germany, for example, had a top tax rate of 56% in 1986. "By 2007," the report states, "it was down to 26 percent. In 2008, in the wake of the recession, Germany cut the top corporate tax rate to 15 percent." This happened in other countries, such as Canada (37.8% to 16.5% in 2011) and the UK (52% in 1981 to 26% in 2011).
The report also notes that since 2010 corporations may deduct 9 percent of corporate profits, which has reduced the top tax rate on manufacturing profits to 31.9%. The report concludes:
It's a step in the right direction. But there is still a long way to go. To be competitive, the U.S. needs more incentives that attract and retain companies. . . . Lowering marginal corporate tax rates in a good place to start.
According to the Detroit Free Press, Gingrich would cut the top tax rate for corporations to 12.5%, Romney to 25%. Santorum would eliminate it for manufacturers and cut in in half for all other corporations. Paul would eliminate taxes on individuals and fund the government through excise taxes, tariffs, and corporate taxes.
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