OECD – “Chile’s Corporate Income Tax Rate Is Fourth Best”
From an historical perspective, economists recognize that countries with lower tax rates promote a stronger economy. This is due to at least a couple of readily observable facts:
- When corporations are allowed to keep more of their income, they are able to put more of it into investing, employment and expansion.
- When countries have low corporate income tax, they tend to draw business interests from abroad.
As the government of a country grows, it tends to become more controlling through both legislation and taxation. This has the net effect of stifling an economy, causing the ever growing bureaucracy to continue increasing taxes in order to fund itself, ultimately destroying the economy of the nation.
We see this exemplified today as countries throughout Europe tax both corporations and individuals into poverty, or expatriation. None of these countries is so onerous as the United States. With a corporate tax rate of over 39%, it’s a full 2% higher than the next runner up, Japan. Other self destructing tax structures include France (34.4), Belgium (34) and Portugal (31.5).
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