Give businesses a tax break

Federal corporation income tax rates are an issue in our capacity to develop and maintain jobs in the United States. These tax rates were an issue in our recent presidential campaign. John McCain recommended reducing corporate tax rates in the United States to strengthen our international competitive position, and I think that he was correct in doing so. We have the second-highest corporate tax rate in the world, exceeded only by Japan, which has a top rate of 39.59 percent compared to our 39.3 percent. The rates reflect combined national and lower jurisdiction rates, i.e. the average state and city rates in the U.S. As a result of differing state corporate rates, a corporation headquartered in Iowa pays a top statutory rate of 47 percent of its taxable income while one headquartered in Washington s pays only the 35 percent federal rate.

The rates charged by the states vary the state tax is normally a deductible business expense for the purposes of determining the federal tax due. It should be obvious that just as U.S.- based corporations would probably prefer to be in Washington rather than Iowa, other considerations being equal, an international corporation would prefer to be headquartered in Mexico or the United Kingdom where the top corporate rate is 30 percent, or perhaps in Ireland where the top rate is 12.5 percent.