President Joe Biden’s proposal to raise counting on corporations has actually renewed arguments around how lot the U.S. Should collect native corporations in tax revenue contrasted to other advanced countries. Advocates of elevating corporate taxes argue that the U.S. Collects much less from corporations compared to the peers and also that the U.S. Has an abnormally low efficient tax price on this firm income. These claims tend come understate U.S. Corporate taxes collections compared to peer nations in the organisation for financial Co-operation and breakthrough (OECD) and also the effective tax rates confronted by U.S. Corporations.

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There space several ways to measure U.S. Taxation collections and the taxes burden. One method is come look at revenue collected from the corporate taxes as a portion of U.S. GDP. Treasury Deputy Assistant Secretary Kimberly Clausing suggests that corporate taxes revenue relative to GDP fell from around 2 percent before the tax Cuts and also Jobs action (TCJA) come 1 percent after ~ enactment, i beg your pardon is listed below the OECD typical of 3.1 percent in 2018 and also 2019.

However, is it important to remember the the U.S. Likewise has a big pass-through service sector, where taxes collections display up in individual earnings tax revenue. Non-corporate business tax revenue do up around 10 percent of complete taxes ~ above income and capital gains in 2014, greater than the OECD median of 6.5 percent. This means that total U.S. Company tax collections as a section of GDP are higher than looking in ~ U.S. Corporate tax revenue in isolation.

Another way of compare the taxation burden faced by enterprise is to look in ~ the effective average tax rate (EATR), which is a forward-looking indicator the the tax burden ~ above a prospective invest made through a corporation, bookkeeping for taxes rates, depreciation, and also other taxation provisions.

According come the OECD, U.S. Corporations confronted an EATR that 24.6 percent in 2019, i beg your pardon ranks over the non-U.S. Typical of 21.9 percent and 13th greatest out the 37 countries in the OECD. In 2017, prior to the TCJA, the U.S. EATR because that corporate invest was the highest possible in the OECD in ~ 37.5 percent.


Instead the calculating a hypothetical EATR, girlfriend could also measure average reliable tax prices using data native the bureau of Economic evaluation (BEA) ~ above corporate taxation collections. However, the data would should be adjusted for the fact that BEA contains S corporation earnings in its wider definition of that company profits, yet does not include taxes that S corporations salary in its corporate taxation data. This has tendency to understate the efficient tax rate confronted by C companies in the U.S.

When adjusting for S corporation tax revenue, the average efficient tax rate using BEA data rises from 20.5 percent to 26 percent in 2017. In 2018, after the TCJA to be enacted, the average reliable tax rate fell to 19.4 percent according to BEA data.

A third way to compare the taxation burden top top corporate investment is the marginal effective tax price (METR). This is also a forward-looking measure of the just how taxation boosts the price of an investment that return just sufficient profit come break even in genuine terms. This is a valuable measure due to the fact that it shows how corporate taxes influence investment incentives.

In 2019, according to the OECD, the U.S. Had a composite METR of about 11.2 percent, over the non-U.S. OECD typical of 7.2 percent and ranked 17th greatest out that 37 countries. In 2017, the U.S. METR was amongst the optimal 10 in the OECD at 17.4 percent. Elevating the corporate tax rate and imposing other taxes on corporate revenue would rank the U.S. Together worse or higher than us stood in 2017, reducing investment incentives in the U.S.

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Whether we usage corporate tax collections as a portion of GDP, average effective tax rates, or marginal taxation rates, every measure mirrors that the U.S. Efficient corporate taxes burden is close come or above the average compared to its OECD peers. Elevating corporate revenue taxes would put the U.S. In ~ a compete disadvantage, even if it is one looks at statutory tax rates or effective corporate taxation rates.