A complex system of exemptions and deductions embedded in the US tax code reduces the corporate tax base and results in corporate taxes contributing a much lower share of total tax revenue in the US than elsewhere. — JPMorgan
A complex system of exemptions and deductions embedded in the US tax code reduces the corporate tax base and results in corporate taxes contributing a much lower share of total tax revenue in the US than elsewhere. — JPMorgan
JPMorgan says it's time for US corporate taxes to catch back up with the rest of the world
  • JPMorgan said the US should increase corporate tax rates to catch up to other world economies.
  • The US is more focused than other countries on raising tax revenue from personal income and housing.
  • Even before the 2017 Trump tax cut, it found US corporate tax revenues lower than the global average.
President Joe Biden kicked off a major debate in early April when he proposed raising the corporate tax rate from 21% to 28% to fund his $4 trillion infrastructure plan. Now JPMorgan has weighed in on the matter and it finds corporate tax revenue is lower in the US than elsewhere, even if the rate is now close to the international average.

And as sentiment appears strong in the US that American corporations don't "pay their fair share," the bank found that relative to other economies, the US "prioritizes raising tax revenue from personal income and property." In other words, the current American tax system raises more from people's paychecks and real-estate investments than from companies, compared to the rest of the world.

JPMorgan's economic research note on Thursday found that prior to President Donald Trump's 2017 tax cuts, the US statutory corporate tax rate of 35% was high compared to other countries, but that law slashed them by 13.2% — the largest decline ever.

Furthermore, the bank found that dating back to 2000, revenues actually collected from American corporate taxes only represented about 2% of gross domestic product (GDP), versus a 3% average globally. This reflects, the bank said, "a complex system of exemptions and deductions embedded in the US tax code that reduces the corporate tax base and results in corporate taxes contributing a much lower share of total tax revenue in the US than elsewhere."

And after the Trump tax cut, this percentage fell to just 1% of GDP. This explains the American reliance on taxing personal income and housing, the note said.

"The US stands out as having both the highest share of revenue from personal income (both labor and investment) across the economies we examine, and the smallest share of tax revenue from taxes on goods and services," the note said.


... JPMorgan concludes that so-called ordinary people account for a greater share of tax revenue in the US than elsewhere.
Read the full article: https://www.businessinsider.com/jpmorgan-us-corporate-taxes-catch-back-up-to-other-economies-2021-4