Competitive Business Tax Rates

Amid speculation of tax reform in the near future as Tim Geithner has stated, many critics have wondered what the United States will do to curb the appetite for our cash hungry government. Many have brought up that the U.S. has the one of the highest tax brackets amongst the OECD (Organization of Economic Cooperation and Development). This statement is true; the United States is almost at the top of that list with 35 percent as its top corporate tax bracket, trailing only Japan that tops out at 39.5 percent. This statistic is actually misleading though. While the U.S. has one of the highest statutory tax rates, its marginal tax rate is 27.1 percent. This is due to all the loopholes and tax break incentives the current tax code offers. Many other countries do not offer such tax breaks to companies. To put this figure into perspective, here is a list of other OECD countries and their marginal tax rate in 2008:

Japan 46%
France 24%
Germany 31%
Belgium 22.4%
UK 27.4%
Sweden 23%

Clearly, the U.S. does not have the lowest tax rate, but they do fall within the average. In addition, when looking at the ratio of federal corporate tax rates as a share of G.D.P, the U.S. falls at 1.3% where as other industrial countries collect about 2.5 percent of total output.

When doing business anywhere, an effective strategy to save money is tax planning. It could mean the life or death of your company and whether it will be as profitable as you had hoped. Every country has different tax laws and policies so it’s important to do your research before jumping in.