The Organization for Economic Co-operation and Development (OECD) is an international organization of 30 countries that accept the principles of a free-market economy. Most OECD members are high-income economies and are regarded as developed countries. The organization publishes research and statistics on a wide variety of subjects, including analysis and forecasts on economic developments and trends, research on social changes or evolving patterns in trade, environment, agriculture, technology, taxation and other areas.

Here is a list of the corporate tax rates of each OECD country, as well as analysis from the Tax Foundation:

Amid rising concerns about the state of the U.S. economy, new data compiled by economists at the OECD shows that for the 17th consecutive year the average rate of corporate taxes in non-U.S. countries fell while the U.S. corporate tax rate stayed the same. As a result, the overall U.S. corporate tax rate is now 50 percent higher than the OECD average.

OECD Corporate Tax Rates – Federal Plus Provincial/State, 2007 and 2008

Rank	Country	Corporate Income Tax Rate 2008	Corporate Income Tax Rate 2007	Change from 2007 to 2008
1	Japan	39.54	39.54	0.0
2	United States	39.25	39.26	0.0
3	France	34.43	34.43	0.0
4	Belgium	33.99	33.99	0.0
5	Canada	33.50	36.12	-2.6
6	Luxembourg	30.38	30.38	0.0
7	Germany	30.18	38.9	-8.7
8	Australia	30.00	30.0	0.0
9	New Zealand	30.00	33.0	-3.0
10	Spain	30.00	32.5	-2.5
11	Mexico	28.00	28.0	0.0
12	Norway	28.00	28.0	0.0
13	Sweden	28.00	28.0	0.0
14	United Kingdom	28.00	30.0	-2.0
15	Italy	27.50	33.0	-5.5
16	Korea	27.50	27.5	0.0
17	Portugal	26.50	26.5	0.0
18	Finland	26.00	26.0	0.0
19	Netherlands	25.50	25.5	0.0
20	Austria	25.00	25.0	0.0
21	Denmark	25.00	25.0	0.0
22	Greece	25.00	25.0	0.0
23	Switzerland	21.17	21.32	-0.1
24	Czech Republic	21.00	24.0	-3.0
25	Hungary	20.00	20.0	0.0
26	Turkey	20.00	20.0	0.0
27	Poland	19.00	19.0	0.0
28	Slovak Republic	19.00	19.0	0.0
29	Iceland	15.00	18.0	-3.0
30	Ireland	12.50	12.5	0.0
	OECD Average	26.6	27.6	-1.0

Why we need to cut our corporate taxes:

Combined with another new OECD study that calls the corporate income tax the most harmful type of tax for economic growth, the implications for U.S. policy are clear. The long-term prospects of the U.S. economy are at risk as long as our corporate tax rate remains out of step with the rest of the world.

The empirical evidence from the new OECD study suggests that “investment is adversely affected by corporate taxation through the user cost of capital,” meaning the after-tax return on investment. Looking at the firm level, OECD economists found that the effect of corporate taxes is strongest on industries that are older and more profitable because of their larger tax bases. Younger and smaller firms (i.e. start-ups) are less affected because they are less profitable.

The OECD study also found that statutory corporate tax rates have a negative effect on firms that are in the “process of catching up with the productivity performance of the best practice firms.” This suggests that “lowering statutory corporate tax rates can lead to particularly large productivity gains in firms that are dynamic and profitable, i.e. those that can make the largest contribution to GDP growth.”

America is being left behind. The new OECD rankings are only the latest indication of the new policy shift that has been sweeping the globe:

According to the World Bank’s Doing Business 2008, 20 non-OECD countries cut their corporate income taxes in 2007 [as well as 9 of the 30 OECD countries]. These corporate rate changes include:

• Bulgaria, from15 percent to 10 percent
• Turkey, from 30 percent to 20 percent
• South Africa, from 12.5 percent to 10 percent
• Columbia, from 35 percent to 34 percent
• Israel, from 31 percent to 29 percent
• Malaysia, from 28 percent to 27 percent

This year, Asian countries have been very aggressive on the tax front. China’s new 25 percent corporate tax rate, down from 33 percent, went into effect in January. Meanwhile, the Korean government has announced that it will cut its corporate rate from 25 percent to 22 percent, Taiwan is considering cutting its 25 percent corporate rate to 17.5 percent, and Hong Kong will cut its rate from 17.5 percent to 16.5 percent. In response to these developments, a Japanese advisory panel has called upon the government to cut Japan’s corporate tax rate to remain competitive and avoid discouraging foreign investment.

Since the report came out in August of 2008, the US government, as well as the rest of the world, has been on a spending spree of immense proportions [think Space Race on roids]. Politicians, whether Democratic or Republican, will be very reluctant to cut any taxes at this time, even if it would better serve the economy in the long run, as opposed to a $800 billion stimulus plan.

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