The New York Times fumes that “This country’s corporate tax rates are among the highest in the industrial world, yet the taxes that corporations pay are among the lowest.”
The article doesn’t mention this, but one of the top causes of tax avoidance is high rates. State and federal tax rates add up to an average of about 40%; the European average is now below 25% and declining. Little wonder, then, that few companies are paying the high U.S. rate if they have better options.
The lesson is simple – lower tax rates mean less tax avoidance.
Of course, it would be best to abolish the corporate tax altogether. It’s really an indirect sales tax. Businesses pass on their costs, you see. When it comes down to it, consumers pay every cent of corporate tax. Direct sales taxes are much more transparent — and harder to dodge.
Inertia Wins! 