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U.S. Corporate Tax Rate Set to Take Highest Position

U.S. Corporate Tax Rate Set to Take Highest Position

Ranking at the top of the class is usually a good sign, but it will be hard to find many positives in the fact that the U.S. corporate tax rate is set to ascend to the highest in the world as of April 1, according to CNN Money.

Japan, which currently "leads" the way, has a 39.8

Ranking at the top of the class is usually a good sign, but it will be hard to find many positives in the fact that the U.S. corporate tax rate is set to ascend to the highest in the world as of April 1, according to CNN Money.

Japan, which currently "leads" the way, has a 39.8 percent tax rate on business income, but that is set to be cut to 36.8 percent on April 1. When including both federal and state tax rates, the U.S. currently sits at 39.2 percent, according to the news source.

Eric Toder, co-director of the non-partisan think tank Tax Policy Center, said that while the U.S. corporate tax code is not increasing on April 1, the move to number one in the world is a poor reflection on the country's economy.

"The change in and of itself is not that important, but there's some symbolism involved in being the highest in the world," Toder explained. "There's certainly been a long-term trend of our rate getting higher relative to everyone else."

While some economists disagree with the way the corporate tax code is quantified, members of both major political parties agree that the corporate tax code needs to undergo at least some changes in order to foster more economic growth and make the U.S. more attractive for businesses, according to the news source.

While President Obama has proposed cutting the corporate tax rate to 28 percent, Republican presidential frontrunner Mitt Romney has suggested a dip to 25 percent, CNN reports.

Bruce Bartlett, an author and former senior policy analyst for President Reagan in 1986, wrote in a recent column for CNN that while it's clear that everyone wants to cut the corporate tax rate, complications arise when it comes to getting rid of deductions and loopholes.

One of the major issues the U.S. encounters when it comes to tax reform at this time is the polarization of the political parties in Washington. Bartlett notes that while both sides of the aisle believe they will be in better position to enact reform after the election, one party will ultimately be wrong.

During a recent meeting with President Obama, many members of the Business Roundtable - which includes the nation's top chief executive officers - said that in order to create jobs, the corporate tax code needs to be brought down to 25 percent, while other new taxes and regulations should be cut, according to CNN.

Bloomberg reports Senate Democrats and House Republicans have both offered proposals for rewriting the tax code for small businesses in advance of the April 17 filing deadline this year. Still, Todd McCracken, president of the National Small Business Association in Washington, told the news source that he was skeptical as to whether the two plans could ultimately be merged and agreed upon.

"They're good symbols of the two different approaches, but I think they're also unlikely to be bridged," McCracken told the news source.

Though the approaches may vary, there is widespread agreement that an adjustment to the corporate tax code will be beneficial to the country's economy. Businesses are choosing to move operations overseas to locations with friendlier tax codes, meaning the tax code is hurting the competitiveness of the U.S. Though recent employment figures have been positive, an adjustment to the tax code likely represents a major next step in the economic recovery process.

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