The United States currently possesses the highest statutory
corporate tax rate in the world, at 35 percent (discounting
state and local taxes). Many analysts say the comparatively high
U.S. rate, coupled with a complex array of tax subsidies and
loopholes, is a doubly flawed system, overburdening businesses
with compliance and planning costs while reducing federal
revenues at a time of rising national debt. Others point out
that the U.S. system, which taxes foreign profits of U.S.
multinational corporations, may put the country at a competitive
disadvantage with most of the industrialized world, which only
taxes domestic corporate income. At time when global economic
competition is intensifying, some critics suggest an overhaul of
the tax code, which last took place in 1986, is long overdue.
Why does corporate taxation matter? As a percentage of the
economy, corporate tax dollars have declined steadily in the
post-World War II period, from more than 5 percent of GDP in
1946 to hovering around 2 percent in rec