September 15, 2015
by Nick Novak
This column was originally published by The Washington Times.
I wrote a column for this paper in the spring that said I would not hold my breath while waiting for much-needed comprehensive tax reform. And it was a good thing I didn’t, because my face would be awfully blue by now.
However, there is a small beacon of light shining in this very dark tunnel. It is by no means a plan for comprehensive federal tax reform, but it is a step in the right direction. The idea is focused on corporate tax reform – which is particularly important because the United States has such a high rate for corporations.
American companies pay the third-highest marginal tax rate in the world – 39.1 percent – according to the non-partisan Tax Foundation. Only Chad and the United Arab Emirates have a higher corporate tax rate.
The U.S. corporate tax rate is actually 16.5 percent higher than the worldwide average of 22.6 percent. With such a high tax rate, multinational corporations have found ways to have as little of a tax burden as possible. One way to do this is to “store” profits in foreign countries with lower tax rates – which at this point is essentially any other country.
Under our tax law, companies have to pay taxes on all profits earned within the U.S., but they also have to pay foreign governments taxes for profits earned in those foreign countries. This seems to be normal, but the U.S. tax code finds ways to complicate it.
Continue reading at WashingtonTimes.com.