Sweden may be best known among Americans as home of the Nobel
Prize and IKEA but astute politicians would be wise to take a
closer look at what this Scandinavian nation is doing
economically.
Last month, Sweden announced plans to lower its corporate tax rate to 22% from 26.3%. In making the move, Sweden's Minister for Enterprise Annie Lööf said reducing the tax rate would "provide a stimulus for both small and large businesses," with the Swedish government predicting "the significant reduction of the corporate tax is expected to strengthen the investment climate and growth in Sweden."
With all the talk of stimulus and jobs in the closing weeks of this political season, the time is ripe for elevating the issue of corporate tax policy as a means of improving America's overall economic health and creating jobs. At 35%, the United States has the highest federal corporate tax rate in the industrialized world. This tax rate applies to all corporate income, regardless of whether it is earned in the U.S. or overseas, the only difference being that income earned outside the country is taxed twice. It's first taxed by the nation in which it is earned and again when it returns to the U.S., with Uncle Sam providing a credit for taxes paid overseas.
Corporate taxes further rise when state and local taxes are added to the equation. In the U.S., this combined tax amounts to 39.1% and when any nation has such a high corporate tax rate, they are automatically disadvantaged in attracting new business. Consider a European corporation contemplating a new facility in North America. Will it be more prone to consider locating in Mexico, with a 30% combined corporate tax rate; Canada, with a 26.1% rate; or the United States, where income will be taxed at 39.1%? Granted, there are myriad factors involved in determining where to locate any manufacturing operation -- everything from local tax breaks to public/private partnerships -- but a topline look at tax policy places America at a disadvantage.
Read more: http://spectator.org/archives/2012/10/01/suppressing-our-economic-power
Last month, Sweden announced plans to lower its corporate tax rate to 22% from 26.3%. In making the move, Sweden's Minister for Enterprise Annie Lööf said reducing the tax rate would "provide a stimulus for both small and large businesses," with the Swedish government predicting "the significant reduction of the corporate tax is expected to strengthen the investment climate and growth in Sweden."
With all the talk of stimulus and jobs in the closing weeks of this political season, the time is ripe for elevating the issue of corporate tax policy as a means of improving America's overall economic health and creating jobs. At 35%, the United States has the highest federal corporate tax rate in the industrialized world. This tax rate applies to all corporate income, regardless of whether it is earned in the U.S. or overseas, the only difference being that income earned outside the country is taxed twice. It's first taxed by the nation in which it is earned and again when it returns to the U.S., with Uncle Sam providing a credit for taxes paid overseas.
Corporate taxes further rise when state and local taxes are added to the equation. In the U.S., this combined tax amounts to 39.1% and when any nation has such a high corporate tax rate, they are automatically disadvantaged in attracting new business. Consider a European corporation contemplating a new facility in North America. Will it be more prone to consider locating in Mexico, with a 30% combined corporate tax rate; Canada, with a 26.1% rate; or the United States, where income will be taxed at 39.1%? Granted, there are myriad factors involved in determining where to locate any manufacturing operation -- everything from local tax breaks to public/private partnerships -- but a topline look at tax policy places America at a disadvantage.
Read more: http://spectator.org/archives/2012/10/01/suppressing-our-economic-power
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