I feel like doing my best John McEnroe impression here: "You cannot be serious!" Anyone who dismisses the new corporate tax numbers is not serious about competing with the EU and Rising Asia. Here are some key results of two new OECD studies on corporate taxes (as interpreted by the Tax Foundation and slightly paraphrased by me):
1) For the 17th consecutive year, the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same. As a result, the overall U.S. corporate tax rate is now 50 percent higher than the OECD average.
2) The United States continues to have the second-highest combined federal-state corporate tax rate among industrialized countries at 39.3 percent.
3) The OECD data show that nine of the 30 OECD member nations have lower corporate tax rates in 2008 than in 2007, including Canada, Germany, New Zealand, Spain, the United Kingdom, Italy, Switzerland, the Czech Republic, and Iceland.
4) This year, Asian countries have been very aggressive on the tax front. China's new 25 percent corporate tax rate, down from 33 percent, went into effect in January. Meanwhile, the Korean government has announced that it will cut its corporate rate from 25 percent to 22 percent.
5) The empirical evidence from the new OECD study suggests that "investment is adversely affected by corporate taxation through the user cost of capital," meaning the after-tax return on investment.
6) The OECD study also found that statutory corporate tax rates have a negative effect on firms that are in the "process of catching up with the productivity performance of the best-practice firms." This suggests that "lowering statutory corporate tax rates can lead to particularly large productivity gains in firms that are dynamic and profitable, i.e. those that can make the largest contribution to GDP growth."