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Newsletter December 2016

MARKET NOTES - U.S. HAS AMONG HIGHEST CORPORATE TAX RATES

One of Trump’s fiscal proposals is to reduce the inherently high U.S. corporate tax rate from 35% to 15%. The United States currently has one of the highest corporate tax rates of any country worldwide at 35%.  The average corporate rate globally is just over 23%. 

Some countries maintain low tax rates or no corporate tax at all, such as Cayman Islands and Bermuda, in order to encourage companies to invest and hire within their countries.  Some believe that if U.S. corporate tax rates drop, it might discourage U.S. companies from seeking tax havens overseas, such as tax inversions. Inversions occur when a U.S. company buys or merges with a foreign domiciled company in order to adopt a lower tax rate. A report released by the OECD raises a concern that some European countries are being used as tax havens, but with little or no benefits achieved by the underlying workforce or economy.

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Sources: OECD