Corporate Taxes: Rates Down, Revenues Up

Chris EdwardsU.S. Treasury Secretary Janet Yellen recentlycomplained about a“30-year race to the bottom on corporate tax rates,” and is pushing for a higher U.S. rate and a global minimum rate. Yellenwants to make sure that corporate taxes “raise sufficient revenue to invest in essential public goods and respond to crises.” EconomistGabriel Zucmanapproved of the proposed tax hike, saying corporations should “pay more in taxes, instead of them paying less and less. "Zucman ’s claim about “less and less” is incorrect when looking across the major economies in recent decades. TheNew York Times charts the OECD average corporate tax revenues as a percent of GDP since 1965here. The percent has trended upward since the mid-1980s, although it is currently below the 2007 peak.The OECD has added new member countries over the years and data is not available for all countries in earlier years, so the NYT average includes different countries in different years. To calculate a more consistent average, I narrowed the group of countries to 22 that have good data back to 1980. For the same 22 countries, I calculated the average corporate tax rate, which for all countries includes the federal plus the state or provincial tax rates. The data is mainly from the OECD, as discussed below.The chart below shows the average corporate tax rate and average corporate tax revenues as a percent of GDP for 22 countries. The average rate fell from 47 percent in 1980 to 25 percent in 2019. As...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs