Corporate Taxes

Corporate Tax Reform

Introduction

According to the Taxation Law, company should pay percentage amount on the profit they earn. In United States, tax is imposed on the profit earned by United States corporate residents' ranging up to 35%. Majority of the corporate shareholders, along with the tax paid on the total income of the company also pay individual tax on dividends and capital gain which his earned through selling shares. 15% is the maximum tax rate which is paid on dividend as well as capital gain, nevertheless. Corporate tax in United States the highest tax rate among developed world, and currently President has planned to reduce this tax rate up to 28% in order to overhaul of the tax code. This paper will recommend changes to the current tax code concerning the corporate taxes.

Discussion

Attractive proposal for U.S. Corporate taxpayers

As corporate tax rate is very high in United States, Barack Obama and MITT Romney's has presented their proposal. According to MITT Romney huge tax break will enhance new job since company would be paying less tax and they will be having ample money to hire additional labor force (Hufbauer, Grieco, Baldwin, 2013).

At present, corporate tax rate is 35% on the U.S. corporate income. U.S. corporate tax payers are very angry with the highest tax percentage among developed nations. Due to this reason, proposal was presented by Barack Obama and MITT Romney highlighting the major reasons for this change. According to Barack Obama proposal, the tax rate mentioned is 28% except for manufacturing companies. These manufacturing companies would be paying 25 percent rate on the income. As far as MITT Romney proposal is concern, tax rate should be same for each sector i.e. 25%. The aim of this tax reduction is to make U.S. companies more competitive in the international market whereas, the tax rate suggested by MITT Romney is due to reduce unemployment in United States. After 2008 crisis, unemployment in United States has been increasing and this can only be reduced if company would be paying less tax on their income. Surplus income would force them to hire more employee that ultimately will be reducing unemployment are in United States.

The aim of the Government from macroeconomic perspective is to generate jobs for citizen and controlling inflation. But, Barack Obama view is from world perspective, he is thinking to increase the competition in the international market along with increasing United States currency value, what he is neglecting is the interest of the citizen which is much important. Hence, considering these points the priority would be given to the MITT Romney proposal rather than Barack Obama (Keightley & Sherlock, 2012).

Impact to corporations and the us economy if U.S. Companies could repatriate foreign profits earned without incurring a federal tax liability

United States companies that are operating in other countries, the aim of the Tax plan is to discourage these companies from transferring their assets overseas & Deposit and leave their profit for year end. Considering this, State has introduced new policy with ...