Are U.S. Effective Corporate Tax Rates Low?
It is widely recognized that U.S. statutory corporate tax rates are high by international standards. According to the OECD, the top U.S. corporate tax rate (federal and average state rate combined) was 39.1 percent in 2009, second highest among the 30 OECD countries after Japan (39.5 percent), and more than 13 percentage points higher than the average for the other 29 OECD countries (25.9 percent).
However, some have argued that effective corporate tax rates are low relative to international norms and U.S. historical experience. U.S. multinational companies, in particular, have been identified as paying low taxes on foreign source income. This paper reviews studies of corporate effective tax rates paid by domestic-only and multinational companies, resident in both the United States and abroad. These studies show that U.S. corporations are not lightly taxed either by international standards or relative to the last three decades of American history.
