Blog Title: The Impact of Corporate Taxation on America’s Economy
In recent news, America is facing a 13-year high in corporate bankruptcies, surpassing even the numbers seen during the pandemic lockdown era. It’s no surprise that companies are turning to friendshoring opportunities to avoid the hefty tax burden that comes with the Made in America label. With businesses hesitant to hire even low-wage workers and experiencing supply chain issues due to the loss of China as a top trading partner, the American economy is facing some serious challenges.
One proposed solution to boost government revenue is to increase corporate taxes. Kamala Harris is advocating for a rise in the corporate income tax rate from 21% to a staggering 35%, which would make America one of the most heavily taxed nations in the world. This move could potentially disincentivize businesses from operating in the country and push them to seek more tax-friendly environments elsewhere.
Comparing America’s corporate tax rates to other major economies, we see that the current rate is already competitive. The average corporate tax rate among G7 nations was 27.18% in 2023, with China standing at 25% and Asia averaging 19.8%. The European Union imposed a 21.15% corporate income tax last year, while the global average among 181 nations was 23.45%.
It’s important to note that corporate taxes have been on a downward trend since 1980, with the 2017 Tax Cuts and Jobs Act significantly reducing the rate from 35% to 21%. This move successfully attracted businesses to America and stimulated economic growth. However, many of the provisions from this act are set to expire in 2025, raising concerns about the future of corporate taxation in the country.
Critics argue that raising corporate taxes will only lead to increased costs for consumers and encourage companies to move their operations offshore. It’s a complex issue that reflects the ongoing tension between government revenue needs and economic growth goals. As voters and policymakers navigate these challenges, it’s crucial to consider the long-term implications of tax policy on the overall health of the economy.
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