A new report from the Congressional Budget Office (CBO)
shows how other industrial countries have undercut the once-formidable
U.S. corporate tax advantage. In nearly every category of tax rate,
America has gone from median or better to the upper quartile. Corporate
taxes take a lower share of GDP in America than in most other
countries, however (1.8% vs a weighted average of 2.5%). More important
than either the rate or the share of income are the distortions caused
by corporate taxes:
The domestic distortions that the corporate income tax induces are large compared with the revenue that the tax generates.
Differences
among countries in their corporate income tax structures distort
incentives for locating investments and create additional opportunities
fortax planning. …Those differential rates may distort the
international allocation of investment and cause businesses to engage
in additional costly internationaltax planning.
