US has highest effective corporate tax rate in developed world
A new report from the Cato Institute shows that the average effective corporate tax rate in the United States is now 35.0 percent. That is the highest rate in the OECD and nearly double the OECD average of 19.5 percent. Effective corporate tax rates are important because US firms must compete for capital on an open, global market. Higher effective corporate tax rates place the US at a disadvantage because it damages the profitability of investment in the US relative to other nations.
What's more, state Senate Majority Leader Steven Horsford has placed new corporate tax levies on the table for the 2011 legislative session here in Nevada. Given that any new state levies will only compound already existing federal levies, this initiative would certainly deter future investment in the Silver State as private firms in Nevada must also compete for capital on a global marketplace.
Lawmakers need to thoroughly consider the long-term economic implications of creating an even more punitive tax environment in Nevada before they convene in Carson City next year. They should probably all get a copy of this book and read it from cover to cover.
Then, when they wonder how the state can meet its fiscal challenges without resorting to corporate tax increases that would divert long-term investment away from the Silver State, we've got a tutorial on where to begin.
