At 35%, the US has one of the highest corporate federal tax rates in the world. Business and conservatives argue that it’s too high, therefore companies increasingly take their headquarters and cash internationally to avoid high tax rates. That’s cash that could otherwise be reinvested in development within the states. This is essentially what’s happening with the Burger King and Tim Horton’s deal, brokered by Warren Buffett that may move the headquarters to Canada.
On the other hand the effective tax rate, or what companies actually pay tends to be substantially lower than 35%. This is due to accounting practices such as depreciation and write offs, coupled with our complicated tax code. In the past 5 years GE, Boeing and Verzion have each had a year where they paid no corporate federal taxes. (http://www.reuters.com/article/2014/02/26/us-usa-tax-corporate-idUSBREA1P04Q20140226)
Clearly, the government needs some revenue through corporate taxes but the current system isn’t working out. Should the federal corporate tax rate be lowered? Should our tax laws change? Maybe both? I’m interested to hear your views whether you are politically left, right or in the middle.