Why the United States Needs to Restructure the Corporate Income Tax

Firms respond to high tax rates and relocate economic activity to lower-tax countries. Thus, the current U.S. corporate tax structure places U.S.-headquartered corporations at a tremendous disadvantage in the global marketplace because other countries have lowered their corporate income tax rates to welcome multinational corporations. This paper discusses the economic implications of corporate taxes.

Read the research summary of this publication: "Fundamental Tax Reform: Fixing the Corporate Tax Code."

To increase employment and expand their economies, most developed countries are both reducing their corporate tax rates and restructuring their corporate tax systems. The United States appears to be taking the opposite approach. Consequently, the increasingly costly U.S. corporate tax structure is driving competitive, profit-seeking corporations to minimize their tax exposure and defer income overseas to lower-tax countries. Unless the United States reforms its corporate tax system, the country will fall further behind in global competitiveness.

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