Did You Know That The United States Will Soon Have The Highest Corporate Taxes?

Believe it or not, the United States is about to have the highest corporate taxes of any other industrialized country. Right now, only Japan has a higher corporate tax rate than the United States. However, that is all about to change very soon.

In less than a week, Japan will be reducing its corporate tax rate to 36.8 percent, while the United States will continue to have corporate taxes of 39.2 percent. This is calculated by combining the current business tax rate of 35 percent with average state taxes of 4.2 percent. It is a curious state of affairs, especially considering that the United States attempts to be an attractive market for corporations.

In addition to Japan, many other countries including China, Russia, Germany, and Canada have lowered their corporate taxes, in response to the current global economic climate. Americans could truly benefit from a reduction of the corporate tax rate. Many companies are unable to provide high pay rates, raises, or bonuses for their employees because of the exorbitant corporate taxes that they have to pay.

The United States prides itself on being first in many things. It is unfortunate that we now must add ‘First in corporate tax rates’ to our list of attributes. Hopefully, President Obama and the other Democrats in office will see reason and reduce our corporate taxes, so American workers can once again go to work with the hopes of receiving fair pay rates, raises, and bonuses.

Taxes And The Proposed Budget

Obama’s 2013 Budget Estimates and Tax Changes

President Obama has plans to make changes in the tax code to raise funds for his 2013 budget to jump start the U.S. hiring.

His proposals are only a wish list to congress, which is not required to act on any of them. However, some of these proposals have already been acted on in the recent years.

The United States Tax code, which hasn’t been overhauled in a quarter century, is riddled with special deductions that favor select groups. While major changes in the tax code during an election year is unlikely, analysts are of the opinion that deficits in 2012 taxes may ignite debates in 2013.

The following are the proposed changes and budget estimates.

INDIVIDUAL TAXES

  • TAX CUTS. Workers are expected to pay lower payroll taxes through 2012.
  • BUSH TAX CUTS. Tax cuts for households earning more than 250 thousand dollars per year will not be available in 2013.

The issue must be resolved before the end of the year, or every taxpayer will be required to pay more taxes.

  • CARRIED INTEREST. Private equity managers and other wealthy people will be forced to pay a tax rate of 35 percent from the current 15 percent on capital gains.
  • BUFFET RULE. The buffet rule will be put into action. The rule states that every taxpayer who earns more than a million dollars per year should pay a minimum of 30 percent tax rate on all their incomes.
  • ITEMIZED DEDUCTIONS CAP. Exemptions for taxpayers who earn more than 200 thousand dollars will be removed.

  • CORPORATE TAXES

    • THE PROPOSED CORPORATE TAX RATE. The Obama administration is expected to lower the corporate tax rate from the current 35 percent to 20 percent.

    There are many other proposals that have elicited different remarks from people all over the country. Other changes are meant to simplify the process of tax return filing by U.S. taxpayers.