The US has both high corporate and capital gains tax rates vs. other advanced economies

Tax Foundation

Tax Foundation

The other day I wrote about the very high US corporate tax rates, both statutory and effective, versus other advanced economies. Turns out the story is nearly as bad concerning capital gains taxes. The Tax Foundation:

Currently, the United States’ top marginal tax rate on long-term capital gains income is 23.8 percent. In addition, taxpayers face state-level capital gains tax rates as low as zero and as high as 13.3 percent. As a result, the average combined top marginal rate in the United States is 28.7 percent. This rate exceeds the average top capital gains tax rate of 18.2 percent faced by taxpayers throughout the industrialized world. Even more, taxpayers in some U.S. states face top rates on capital gains over 30 percent, which is higher than most industrialized countries. In fact, California’s top marginal capital gains tax rate of 33 percent is the third highest in the industrialized world.

And when you look at the combined tax rate on capital, you find a huge gap. The US integrated rate is 67.8% versus 43.7% for OECD economies.


6 thoughts on “The US has both high corporate and capital gains tax rates vs. other advanced economies

  1. Once again we are treated to much smearing of ashes and rending of clothes over retail tax rates no self-respecting corporation or techie billionaire would ever pay. Here is Greg Mankiw, no liberal he, taking down Warren Buffett correctly for plumping for higher top rates while dodging capital gains on his own account.
    To the traditional avoidance schemes — buy and hold, donate and bequeath — we can add the financial engineering that allowed Mark Cuban to lock up his Yahoo gains without incurring a tax bill.
    And as long as multinationals have an option of paying Ireland’s corporate rate of 12.5 percent, we shouldn’t be too surprised that a GAO study put the US effective rate in 2011 at 12.6 percent.
    Two givens here. Their tax attorneys will always be smarter than the government’s. American multinationals are American in name only.

  2. I like tax cuts (that means cutting government spending on DoD, VA and DHS) a double bonus.
    But there is an inconvenient truth: top federal income tax rate in the 1960s was over 90 percent and the USA boomed, boomed, zoom-boomed…

      • And nobody pays these rates so how about an honest pitch from big business. Cut our rates and we’ll bring our profits back to the US. Maybe.

        • Let’s try an experiment Turd.

          Let’s jack up your US “statutory rates” to 100%.

          Since nobody pays them – but they are published and enforceable – let’s see how many corporations talk to your country.

          Meanwhile, I’ll be “a different country,” called, say, Europe.

          We used to have the most restrictive capital controls in the developed world, but now, not so much.

  3. Chris-

    Fine–but we are talking about top tax rates as defined by law…that’s what the charts are showing…they do not show actual tax rates, or after loophole tax rates….

    As a fraction of the federal revenues, corporate income taxes were much higher in the 1960s than today (in part because of swelling payroll taxes since then).

    The story of the federal budget in the last 40 years is huge payroll taxes….and programs financed by payroll taxes….

    Hey, I would be happy to switch to simple consumption taxes…..

    But the truth is, the USA had 90 percent and higher marginal federal income tax rates in the 1960s, and we boom-boomed, zoom-boomed….

    We also had a growth-oriented Fed…

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