July 10, 2010 |
By
Keith Martin in Washington, DC
The US effective tax rate on corporations, at 35%, is 6.2% higher than the average among G-7 countries and 15.5% higher than the average among the 30 OECD countries, according to a research paper released in May by the right-leaning Cato Institute in Washington. The paper said the United States relies on a high effective tax rate and narrow tax base that is whittled away by targeted tax incentives, in contrast to the approach in other countries of a broader tax base and lower rate. However, interestingly, the paper said that if a “depreciation bonus” that expired at the end of 2009 is taken in account, then the US effective rate drops to 27%. The US Senate was considering extending the bonus through 2010 as part of a “small business” tax bill that Senate leaders were trying to push past a Republican filibuster as the NewsWire went to press . . . . Many US companies are failing to withhold US taxes on payments of interest, royalties, fees for services and rents to foreign vendors, two senior IRS officials warned at a conference in New York on June 17. They said this is one of several areas where the IRS is getting tougher on enforcement.
