Tuesday, August 19, 2014

US Corporate Tax Code Does Not Make US Firms Uncompetitive

A recent study of the US corporate tax code shows that US multinationals have found ways around the corporate tax code.  They are so good at this that their effective tax is much lower than the tax rate that they regularly criticize.  It is also lower than the real taxes paid by their competitors.  That does not mean that the tax code should not be made more efficient.  It is riddled with inefficiencies and distortions that have been put their by friendly politicians.  That is why it would be difficult to reform the tax code.  There would be a battle between corporate interest groups over which loopholes should be removed.  The bottom line is that we should take corporate squealing about the high corporate tax rate in the US with a grain of salt.

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