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When faced with the choice of taxing companies more or raising the taxes of individuals, most people would probably choose to tax corporations. After all, they’re the ones with all the money, right?
While it’s natural to want to pass the buck to anyone other than ourselves, the problem is that raising income taxes on corporations may serve to lower your personal taxes in an untended and unpleasant way: by getting you laid off.
The world economy is increasingly global. While not all companies directly compete with others around the world, many do. If the company you work for pays less income taxes than a similar company in another country, it’s more profitable and therefore more likely to expand and hire workers, rather than lay them off. So while you may not wish higher taxes on yourself, wishing them on corporations isn’t a great idea either.
With that in mind, here’s a look at some corporate taxes around the world, according to the Tax Foundation. Per this article, the United States has the highest corporate tax rates among the 34 member countries in the Organization for Economic Cooperation and Development (OECD). Here are the top 15…
- United States: 35 percent
- Japan: 34.54 percent
- France: 34.4 percent
- Belgium: 33.99 percent
- Germany: 30.18 percent
- New Zealand: 30 percent
- Spain: 30 percent
- Australia: 30 percent
- Mexico: 30 percent
- Luxembourg: 28.59 percent
- Canada: 28 percent
- United Kingdom: 28 percent
- Norway: 28 percent
- Italy: 27.5 percent
- Portugal: 26.5 percent
And it gets worse: The above list doesn’t represent an apples-to-apples comparison. Because while this list includes the complete income tax burden for the non-U.S. countries listed, it doesn’t include state income taxes for U.S. companies. Here are the combined state and federal top rates for the states with the highest taxes…
- Iowa: 41.6 percent
- Pennsylvania: 41.5 percent
- Minnesota: 41.4 percent
- Illinois: 41.2 percent
- Alaska: 41.1 percent
Bottom line? For the United States to compete in a global environment, the lower our corporate tax rates, the better. But with both federal and state budgets hemorrhaging red ink, relief isn’t likely to come along anytime soon.