Corporate Tax Rates - Income Tax History - Income Tax Estimator of Economic and Job Growth

Corporate tax reform in Japan, Europe and America are under review with the new Japanese corporate tax reforms. Corporate tax rates, economic reform and job growth are at the forefront of discussion. That is except for in America it seems. The global financial crisis has crippled growth prospects throughout the world. We have seen massive financial bailouts in Europe and America in particular. We still have ongoing debt problems as a result with severe austerity measures called for. These measures are dragging on economic growth. Corporate tax rates are being touted as important stimulus measures. This appears to be a belated realization that any recovery will come from the private, not the public sector.

Trillions of dollars of public funds have gone to ineffective bailouts to prop up banks, insurance companies and car companies in the US and we still see bleak jobless claims and weak manufacturing. It may surprise you that US ranks second highest with 39.1% in the OECD list of major countries corporate tax rates. Japan has the highest with 39.54%. There is little room to go higher as many socialist commentators call for in the U.S. and Europe. There must be incentives to employ and cover additional costs such as healthcare. Corporate tax reform in Japan, Europe and America would be such an incentive for businesses to hire. We have seen Japan and the United Kingdom move in that direction.

Corporate Tax Rate Ranking

The following table ranks corporate tax rates of the Organization for Economic Co-operation and Development nations as of 2009. Candidates for corporate tax reform in Japan, Europe and America look easy to spot at first glance.

Lowest rates to highest rate

Rank - Country - Corporate Tax Rate

1 Ireland 12.5

2 Iceland 15.0

3 Poland 19.0

4 Slovakia 19.0

5 Czech Republic 20.0

6 Hungary 20.0

7 Turkey 20.0

8 Switzerland 21.17

9 South Korea 24.2

10 Austria 25.0

11 Denmark 25.0

12 Greece 25.0

13 Netherlands 25.5

14 Finland 26.0

15 Sweden 26.3

16 Portugal 26.5

17 Italy 27.5

18 Mexico 28.0

19 Norway 28.0

20 United Kingdom 28.0

21 Luxembourg 28.59

22 Australia 30.0

23 New Zealand 30.0

24 Spain 30.0

25 Germany 30.18

26 Canada 31.32

27 Belgium 33.99

28 France 34.43

29 United States 39.1

30 Japan 39.54

Source: OECD corporate tax rates 2009

The Japanese government has pledged to reduce its corporate tax rate of about 40 percent to 25 percent in efforts to raise Japan’s long-term growth to a nominal 3 percent. The U.K has declared they will lower rates, as has the Australian government. Cyprus actually plans to raise its corporate tax rate. However it has one of the lowest rates in the EU. It will raise it to 11 percent from 10 percent. The plan is to raise it for two years to help bring its budget deficit in. The Cyprus budget deficit is more than double the EU limit of 3% of GDP.

In the US there seems to be no shift from the existing Obama administration towards lowering corporate tax rates. In a nation now besieged by the BP oil crisis and the Oil drilling moratorium one wonders where further stimulus will come from. In a quick search of corporate tax policy all I could find was Republican gubernatorial candidate Charles Baker’s plan. He plans to reduce business taxes in Massachusetts. The rational is to create job growth. This was announced before the Greater Boston Chamber of Commerce, Baker’s plan is to lower the corporate tax rate from 8.75 percent to 5 percent and phase it in over four years.

Note this is for a state corporate tax cut. In other words a company operating in many US states is subject to the Federal company tax in addition to a state tax. When we sit and blame corporations and the wealthy it is worth noting who pays the bills. I wonder where the next round of stimulus comes from?

The last went to the “evil empire’ of banks and insurance companies through taxpayer funded bailouts. It is worth noting where America sits on the global scale, after the Japanese cuts America will have the highest corporate tax rate out of the major countries in the world. Corporate tax rates, economic reform and job growth need to be a addressed in the U.S. before the recovery clock winds down.

Corporate tax reform in Japan, Europe and America will be likely on the financial reform agenda for a while yet. An income tax estimator of changing corporate tax rates, income tax history and economic an jobs growth needs to be done as the U.S. worries about a double dip recession.