Don't raise the tax rate, instead collect unpaid taxes
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IRS Commissioner Chuck Rettig’s recent comments before my former colleagues on the Senate Finance Committee represents the larger problem with any proposal to raise the federal corporate income tax rate. As Commissioner Rettig noted last month, “The amount of taxes going uncollected by the federal government could be as much as $1 trillion or more per year,” an estimate “far beyond the official $441 billion difference between taxes paid and taxes owed annually.” Any increase to our country’s globally competitive corporate tax rate would be the wrong solution to the wrong problem. Worse still, raising the corporate rate wouldn’t just grow the foregoing tax gap – it would also grow the competitiveness gap between the United States and the countries with which we vie for investment and jobs.
With a combined rate of more than 25%, American businesses already pay a higher tax rate than the one required by global competitors. For reference, companies in the countries that constitute the Organisation for Economic Co-operation and Development are subject to an average rate of 23.4%. The recently proposed 28% federal rate would swell to more than 32% once state and local taxes are accounted for. Such a figure threatens to put us even further behind competitors like China – whose 25% rate already undercuts our current one. It would also give the United States the dubious distinction of having the highest rate in the world yet again. By contrast, as the Wall Street Journal reports, “nine of the world’s largest and most advanced economies have reduced their top corporate tax rate in the past four years.” Meanwhile, France, the Netherlands, and Sweden “have announced they will implement changes to [reduce] their statutory corporate income tax rate over the coming years,” according to the Tax Foundation.
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If the pandemic showed us anything, and is still showing us, if a country does not manufacture essential items, the supply chain can grind to a halt very quickly. And what a train wreck we have had.
So, I guess we now need to tax business some more, so they will off-shore even more production?
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What is a typical tax fraudster? Is it a regular bloke lying on his return, or it some rich bastard stashing funds away illegally?
