Tax Code is the key to competing with China
Two provisions in the 2017 taxA Tax is a mandatory payment that is collected by local, State, and National governments from individuals and businesses to cover costs of government services, goods and activities.
Cuts are crucial to the great power competition. Taxes are almost always the primary issue that connects the tax reform debate to strategic competition with China. Nevertheless, certain provisions of the 2017 Tax Cuts and Jobs Act should receive some attention, particularly the 100 percent bonus deduction and the R&D amortization. The major reforms and individual tax cuts introduced by the TCJA will expire in 2019. While the individual tax cuts will get most of the attention, the business provisions are important for the U.S.’s economy in the world and especially relative to China. The United States has a federal
corporate tax. A corporate income tax is levied on business profits by the federal and state governments. Many companies are exempt from the CIT, as they are taxed under the individual income taxes.
is 21 percent, and when you add in the various state-level taxes on corporate income, it’s a combined rate 25.8 percent. This is just a little bit above China’s standard rate of corporate tax, which is 25 percent. The statutory corporate tax rates are only part of the picture. China offers many tax exemptions to specific regions and industries. However, there is also a subtler difference. The base of the tax code (how corporate incomes are calculated) is critical to how a corporate tax affects an economy. The tax base of a corporation is one of the most important parts. A narrow tax basis is inefficient and non-neutral. A broad tax base allows for lower tax rates and reduced administration costs.
This is a preview of our full op-ed originally published in The National Interest.
This is a preview of our full op-ed originally published in The National Interest.Continue readingStay informed on the tax policies impacting you.Subscribe to get insights from our trusted experts delivered straight to your inbox.
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