“Should Corporate Tax Rates Be Restored to 2017 Levels?”
One of the tax increases proposed by the Biden Administration would restore corporate tax rates in the U.S. to 28%. This was the level they were at prior to the Tax Cut and Jobs Act of 2017, which lowered rates to their current 21%. Regardless of one’s beliefs on the merits of the spending proposals, it is clearly worthwhile to be aware of how our corporate rates stack up against the rest of the world. Our corporations must compete with others based outside the United States and many would argue that there should be a “level playing field”.
Here are the corporate tax rates of a list of countries as of 2020:
- Hong Kong—16.5%
- United Kingdom—19.0%
A cursory review of this list suggests that an increase from 21% to 28% will put the U.S. among the higher rates of corporate taxation. Of course, one must keep in mind that there are no worldwide standardized accounting rules on expense deductions and revenue recognition, so merely comparing percentages may not give an “apples-to-apples” comparison. Just the same, the Biden administration may have to mount a substantial promotional campaign to convince a well-informed public that they are merely asking U.S. corporations to be paying “their fair share.”
If you would like to learn more about these and other wise financial planning moves, please contact us through our Level 5 Financial LLC website or via phone at 719-323-1240. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.