At a maximum rate of 35 percent, the U.S. corporate tax rate is one of the highest in the world, and the highest of all the advanced, industrialized nations. And then there is corporate income tax on the state level. Forty-four states and the District of Columbia levy a corporate income tax with rates ranging from 4 percent in North Carolina to 12 percent in Iowa. Nevada, Ohio, Texas, and Washington impose more insidious gross receipts taxes instead of corporate income taxes. Delaware and Virginia impose both; South Dakota and Wyoming impose neither.
Some companies are fleeing the United States because of its crushing tax burden.
As recently pointed out by Timothy Doescher and Karl Keyzer-Andre at the Heritage Foundation’s The Daily Signal (“Here Are 6 Reasons to Lower the Corporate Tax Rate Immediately”):
Politicians and pundits often talk about companies moving operations to more friendly corporate tax countries, and they are right to do so. The corporate tax climate in the U.S. is a major factor in companies’ decisions to move abroad.
Clearly, corporate inversions are a problem that needs to be solved—but using regulation to keep companies on U.S. soil is the wrong way to solve the problem. Using executive orders to force companies to stay fails to address the deeper reason companies are fleeing.
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The authors give examples of six U.S. companies that bought or merged with foreign companies and relocated their legal domicile to a lower-tax nation: Burger King to Canada, Liberty Global PLC to the United Kingdom, Tyco International PLC to Ireland, Medtronics PLC to Ireland, Waste Connections Inc. to Canada, and HIS to the United Kingdom.
The corporate tax rate is…