First, it has to be admitted that the ability of companies to avoid these taxes varies from country to country, so the OECD study is flawed, perhaps entirely.
Second, if the tax rates are to be taken at face value, the weighted non-U.S. rate among OECD countries is 29.3%, which makes the American rate of 32.9% very high by comparison. But the American rate has been steady since 2002, which includes a period of great economic expansion before the great recession. Tax rates do not appear to have hurt that expansion. Or, if they did, the U.S. economy might have grown at an all-time record pace. But that would be difficult for a nation with such a large gross domestic product.
The tax rates of the truly healthy economies that made it through the recession close to unscathed are below the OECD average. The rate in Norway is 28%. In Sweden it is 26.3% and in Finland 26%. Germany, the largest economy in the European Union, and currently the only one that is expanding much, has a tax rate of 30.2%. That is down from 38.9% some 10 years ago — a huge drop.
Many of the economies that have been most badly damaged economically also have low tax rates. Greece’s is 20%. Iceland’s is 20% and Ireland’s 15%. Based on these numbers, corporate taxes hardly helped these nations at all.
The OECD tax rate analysis does not say much that is useful. In part, this is because corporations have ways to avoid taxes. Also, it is because there is no reasonable relationship between tax rates and national economic health.
Douglas A. McIntyre
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