The U.S. is a worldwide business leader. However, high corporate taxes increase the difficulty for businesses to compete internationally in this age of globalization. Private investment in the U.S. can be increased if the federal statutory corporate income tax rate is reduced.
According to Heritage analysts, the federal corporate rate matters for U.S. economic growth because all corporations’ investment decisions are influenced by the tax rate’s effect on a project’s rate of return. Additionally, it influences where multinational businesses decide to invest in new productive capital.
In order to spur economic growth America needs to make corporate tax rates competitive. Currently, the U.S. is tied with Japan for the highest rates and has maintained rates significantly and consistently higher than the average of industrialized nations.
This chart is part of Heritage’s 2011 Budget Chart Book, featuring charts on federal spending, revenue, debt and deficits, and entitlement programs.