America The Uncompetitive
The release of these two OECD studies could not have come at a better time for the current political debate over how to move the U.S. economy forward. A U.S. corporate tax rate 50 percent higher than the OECD average should be a wake-up call to Washington, especially when combined with the empirical evidence that corporate taxes are the most harmful tax on economic growth. The question remains for the presidential candidates, What is your plan to restore American competitiveness?
The WSJ has a related editorial today, which concludes that "Every month that goes by without tax reform, America is a relatively less attractive place to do business. Over the past 18 months, nine of the 30 most developed nations and 20 countries world-wide -- from Israel to Germany to Turkey -- have cut their corporate tax rates. Nations are slashing rates to attract capital and jobs from the U.S., and the tragedy is that our politicians keep making it easy for them."
MP: Below is a Tax Foundation chart (click to enlarge) showing how the McCain and Obama tax plans compare to each other, and to the current tax law. Note that McCain would cut the corporate tax to 25% while Obama would leave it at 35%.