High corporate tax rates are undermining U.S. international competitiveness. The global economy continues to demand that companies be flexible and swift in order to remain competitive. High tax rates deprive companies of both the means and the incentive to take advantage of new market opportunities or technological changes that can improve productivity.
Most advanced countries in the world have responded to new global economic realities by slashing corporate tax rates. The U.S. stands almost alone in having resisted such cuts, and its corporate tax rates are now among the highest in the world. Future U.S. prosperity depends on the willingness of our political leaders to resist populist anti-corporate dogma and make the necessary adjustments to keep the U.S. economy competitive.
America’s strength and economic success are based on economic freedom, which fosters the virtuous cycle of entrepreneurship, innovation, and growth. Our economic freedom has sustained economic opportunity and prosperity, as well as the creativity that leads to new products and new jobs. Clearly, U.S. inaction in improving fiscal freedom through more competitive tax rates undermines our economy’s innovative pulse; America stands still while its competitors are moving forward. As the 2010 Index reveals, since July 2008, more than 30 countries have introduced reforms in direct taxes or have implemented tax cuts as previously planned, despite the challenging economic and political environment caused by the global economic slowdown.
America’s inaction is particularly damaging in a time of economic slowdown and ongoing recovery. A long-term policy plan that strengthens economic fundamentals would calm fears among entrepreneurs and restore confidence in the U.S. economy.