At 41.1 percent, the corporate tax rate in the United States is the highest worldwide, according to a new study by UHY, a global accounting and consultancy network.
UHY calculated the rate using a combined federal and assumed state tax rate of 7.1 percent on taxable profits of $1 million for the 2014-15 financial year.
Globally, the average corporate tax rate is 27 percent, while the Group of 7 (G7) rate is 32.3 percent. European companies pay an average rate of 25.3 percent. Results are based on the firm’s analysis of companies in 31 countries within its own business network.
With tax inversions high on governmental and corporate radar screens, the report notes the obvious: Low corporate tax rates create a competitive advantage, and help countries retain domestic companies and discourage them from relocating elsewhere.
“There is a global competition amongst countries to offer a lower corporation tax rate, and there are enormous advantages for those countries that can put themselves ahead of the pack,” Dennis Petri, a partner at UHY LLP, said in a prepared statement. “Enabling companies to retain more of their profits encourages them to reinvest more capital back into their business, helping to drive innovation.”
A corporate tax cutback in the United States would encourage corporate investment from foreign companies, he said.
The report lists the following as the 10 highest corporate tax rates:
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.