The U.S. Has the Highest Corporate Income Tax Rate and Among the Highest Personal Rates

In today’s globalized world, U.S. corporations are increasingly at a competitive disadvantage. They currently face the highest statutory corporate income tax rate in the world at 39.1 percent. This overall rate is a combination of our 35 percent federal rate and the average rate levied by U.S. states. Corporations headquartered in the 33 other industrialized countries that make up the Organization for Economic Cooperation and Development (OECD), however, face an average rate of 25 percent. Even corporations in high-tax European countries such as Belgium (34 percent), France (34.4 percent), and Sweden (22 percent) face much lower rates than those in the United States. Our largest trading partners—Canada, Japan, and the United Kingdom—have each cut their corporate tax rates over the past few years to become more competitive.

Only Aruba and Sweden have a higher maximum individual tax rate than the USA:

About fafc

The goal of the “Find a Free Country Project” is to research, explore and find a safe and secure free country outside the USA, that is not too large, has a relatively open immigration policy, has a friendly business climate, has a non-intrusive government committed to freedom, and then move to it.
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22 Responses to The U.S. Has the Highest Corporate Income Tax Rate and Among the Highest Personal Rates

  1. Croatian Capitalist says:

    It is sad to see what has become of a once truly great country, it is beyond embarrassing that countries run by communists such as China and Vietnam have more pro-business tax rates than America!

    • fafc says:

      very interesting

      • Croatian Capitalist says:

        Yes, what I find particularly interesting for example is the fact that supposedly socialist/communist Vietnam doesn’t tax dividends at all, while supposedly capitalist countries such as the USA and New Zealand tax them at 30%

  2. Croatian Capitalist says:

    As for the corporate tax rates, Hungary is going to be the best country in the OECD in that regard from next year:

  3. Croatian Capitalist says:

    It’s sad that I have more faith in Vietnam’s future than that of the vast majority of Western countries.

    As for Hungary, they also plan to make the individual tax rate 9% in 2018:

  4. Croatian Capitalist says:

    Anyway, there is one thing I don’t like about these studies, namely the fact that the issue of indirect taxation is usually either avoided altogether (except for VAT of course) or it’s limited to just the main ones, for example the main tax rates for Croatia might not look too bad, but we have over 600 (!) indirect taxes (for example when you buy gas. 60% of the money you pay goes to the government as an excise tax), so the actual situation is much worse than a foreigner looking at the Wikipedia article would think, thus I would like to see a study focused on this issue done.

    • fafc says:

      The US has the same problem, but in some ways made worse by all the different state rates. For instance the effective tax rate in California and New York for most wage earners is over 60%, but most people don’t see the taxes as they are hidden from view.

      • Croatian Capitalist says:

        Yes, local taxes are another issue generally not covered properly, in Switzerland the tax burden differs widely from one canton to the next, in Canada between the provinces, etc., in some places even cities can charge taxes (for example in Croatia the capital city of Zagreb can take up to 30% of your income as a local income tax).

        Yet another issue not properly covered are regulations that are not taxes per se, but in reality they are, for example believe or not in Croatia you can get fined by the government if the keyboards of the computers in your company are not “properly pointed” or if you don’t report how much fuel the company owned cars use. etc., so in essence idiotic regulations whose sole purpose is to fine people to fill the government’s coffers, so that the public sector moochers get payed.

        • fafc says:

          I was warning people about that in the US. As it becomes more and more difficult to raise taxes the various regulatory agencies went from compliance and advisory roles to a cash cow collecting fines and penalties.

  5. Croatian Capitalist says:

    If you type “OECD reveals world tax rates: Time to move to New Zealand?” into Google, it should open once you click on the first result, if not, here are the charts:

    • fafc says:

      I suppose all these numbers are suspect. New Zealand has one of the highest and growing tax rates in the world. Many New Zealand businesses are leaving because of it. Perhaps the data is from many years ago?

      • Croatian Capitalist says:

        The data is (supposed to be) from 2016, and even though the article does mention that various taxes are not included (such as sales and value-added taxes, property taxes, and taxes on investment income and gains), I still agree that much of the numbers look suspect, Chile’s in particular stand out for me.

  6. Croatian Capitalist says:

    Unless the Republicans mess everything up yet again, it looks like the USA might finally get a better tax system soon.

    • fafc says:

      I would put money on the Republocrats blocking it. They can’t extort money from businesses when they solve the problem.

      • Croatian Capitalist says:

        Yes, but you would probably only get something like a nickel for every 100 USD you would bet on the Republicans sabotaging tax reform…

        But still, I hope that Trump’s tax reform bill will pass, if for no other reason because it might “inspire”/”force” other countries to follow suit.

  7. Croatian Capitalist says:

    Yet another thing to keep in mind when looking at the tax rates of various jurisdictions around the World is that low (or even non-existent) taxes don’t necessarily translate into low costs of living, working, etc., for example look at the UAE, or more specifically Dubai, you would logically think that in a place with no personal income tax, no corporate income tax, no VAT, where more or less all the physical labor gets done for peanuts by third World immigrants, etc. everything would be cheap or at least somewhat sensibly priced, wouldn’t you? But when are actually look at the prices of real estate (both for renting and for buying), medicines, food, clothes, etc., more or less everything is expensive (or at least more expansive that it is in the majority of the West).

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