The competition of tax rates
A European nation appears “hungry” for business after lowering its corporate tax rate. But what does that say about the United States?
Viktor Orbán, Hungary’s prime minister, has announced the government will introduce a flat corporate tax rate of nine percent, the lowest in the European Union. The average corporate tax rate in the 28-country EU this year was slightly above 22 percent.
Orbán says the new rate is part of the government’s efforts to boost competitiveness, and that is why politicians and people in the U.S. have been calling for a reduction in America’s corporate tax rate.
“Hungary’s tax cut is an important reminder to Congress and the president that they are not the only one setting the tax reform agenda here in the United States,” comments Pete Sepp, president of the National Taxpayers Union. “Other countries are not standing still, and we can’t do so, either.”
The current U.S. corporate tax rate is a 35 percent maximum at the federal level. State and local taxes add an average of 4.1 percent. So with the tax rate more than 39 percent in the United States, compared to an average among industrialized nations of more like 25 percent, Sepp calls that a huge difference and a huge disadvantage.
“President-elect Trump would lower the corporate tax rate to just 15 percent, making us actually more competitive than European and industrialized nations,” Sepp continues. “It would be a major step forward in allowing our businesses to prosper, both at home and abroad.”
Meanwhile, far-left members of Congress and those outside Capitol Hill have called for an increase in the corporate tax. They say it is too low.
