(LEAD) Trump could spur global corporate tax cut competition: think tank
SEOUL, Nov. 17 (Yonhap) — U.S. President-elect Donald Trump’s pledge for a huge corporate tax cut could spur moves to reduce taxes on businesses and the rich across the world, a Seoul-based think tank said Thursday.
During the campaign, the real estate mogul-turned-politician vowed to lower the business tax rate from 35 percent to 15 percent so that the world’s largest economy can grow again. If implemented, it would lower the U.S. corporate tax rate to the third lowest among advanced economies, following Switzerland’s 8.5 percent and Ireland’s 12.5 percent.
Economists say such a move could encourage other major economies to follow suit to deter companies from moving to other countries to avoid high tax rates at home.
“Trump’s tax plan is expected to accelerate global competition to reduce taxes on businesses,” Hyun Jin-kwon, the chief of the Center of Free Enterprise (CFE), said during a seminar. “More countries have already been moving to simplify tax codes and slash rates. If Trump’s pledge goes into effect, the trend will continue to gain steam.”
Under the current circumstances, the conservative economist claimed South Korea’s move to raise the corporate tax rate from the current 22 percent goes against the global tide of lower rates and would have a negative impact on Asia’s fourth-largest economy.
“(A corporate tax hike) would mean that South Korea becomes an unfavorable country for corporate activities, which in turn will lower economic growth, employment and household income,” he said.
During parliamentary sessions, opposition lawmakers called for higher corporate taxes, which were significantly reduced in the previous administration. Ruling lawmakers argued that such a move will adversely impact the local economy and business sentiment.