Taxes on Capital Income Are More Than Just the Corporate Income Tax

The United States’ statutory corporate income tax rate is now more aligned with the rates of other nations . However, taxes on capital income, or corporate investment, are more than just the corporate income tax. Shareholder-level taxes, such as those on dividends and capital gains, also affect incentives to save and invest. The combined tax rate on corporate profits in the United States is above the average across Organisation for Economic Co-operation and Development (OECD) countries. For example, in 2018, the first tax year after passage of the Tax Cuts and Jobs Act, the U.S. combined rate was 47.25, compared to the OECD average of 41.7 percent. However, the U.S. rate has markedly improved since the Tax Cuts and Jobs Act passed—in 2017, the combined tax rate on corporate profits in the United States was 56.32 percent. The combined rate shown above takes into consideration corporate income taxes and personal income taxes that apply to profits at the federal…

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