How much do corporate taxes actually bring in around the world?

  • Share
  • Read Later

At the request of several commenters to my post on how U.S. corporate tax rates compare internationally (they’re really high), I have now dug out the OECD’s estimates of the taxes corporations actually paid, as a share of GDP, in 2005. As best I can tell, you have to pay money to the OECD or have them certify you as a journalist to to get this data, although there is some free stuff from the source document, the 2006 edition of Revenue Statistics, available here. Compiling this involved some actual arithmetic on my part, so don’t blame the OECD if I got it all wrong:

Norway 12.8%
New Zealand 5.7%
Luxembourg 5.5%
Czech Republic 4.6%
Belgium 4.0%
Spain 3.9%
Netherlands 3.9%
Sweden 3.7%
Denmark 3.6%
Canada 3.5%
United Kingdom 3.4%
Ireland 3.4%
Finland 3.4%
United States 2.9%
Italy 2.8%
France 2.8%
Switzerland 2.5%
Slovak Republic 2.4%
Iceland 2.4%
Turkey 2.3%
Austria 2.3%
Hungary 2.1%
Germany 1.8%
Japan 0.4%
Korea 0.4%

Of the five OECD countries with the highest corporate tax rates (Japan, the U.S., Germany, Canada and Spain), two are near the bottom in revenue, two are in the middle, and one (Spain) is near the top. Of the five with the lowest rates (Ireland, Hungary, Iceland, Slovak Republic and Poland), three are in the bottom half, one is just above dead center, and one (Poland) didn’t turn in its numbers on time. That clears it all up now, doesn’t it?

Still, all thirteen of the countries with higher corporate tax revenues as a share of GDP than the U.S. have lower corporate tax rates. That may say more about the social norms and sizes (most are pretty small) of those countries than the incentive effects of lower tax rates. But still, we probably ought to be at least talking about lowering corporate tax rates here.

As I’ve studied the private equity taxation debate, I’ve become more and more convinced that the private equity boom of the past decade in the U.S. has been driven in large part by tax arbitrage. By buying corporations and then loading them up with enough debt that they no longer have any taxable earnings, then paying their partners with “carried interest” that for reasons that have more to do with history than logic is taxed as capital gains instead of as ordinary income, the private equity firms are doing an end run around the U.S. tax system. When things like that happen, it’s always worth asking whether we should be saying shame on those private equity firms or shame on the U.S. tax system.

Update: Disregard the previous paragraph, and read this.

Sort: Newest | Oldest