US corporation tax becomes highest in the world

The US now officially has the highest rate of corporation tax in the world, after Japan dropped its rate on April 1.

The US’s average combined federal-state rate of corporation tax stands at 39.2 per cent, which is now higher than the Japanese rate of 38.01 per cent. Japan’s rate had previously stood at 39.5 per cent.

The move has angered US business representatives, who are calling for urgent corporate tax rate reform, as it could see business people make use of more attractive legislative domains to incorporate their businesses, such as Hong Kong, Singapore or the British Virgin Islands.

James Pinkerton, a former domestic policy adviser to Ronald Reagan and the co-chair of the RATE coalition of companies that support lower rates, said that the US corporation taxes were only putting greater burdens on the country’s job creators.

He said, “Our corporate tax code […] will deter companies with much-needed capital from investing in America and instead they will invest and hire abroad, shifting US jobs overseas.”

Both Barack Obama and Mitt Romney have put forward proposals to cut the corporation tax rate, with Obama’s plan lowering it to 28 per cent and Romney’s lowering it to 25 per cent.