Obama should cut corporate tax rate, potential GOP foe says

The next presidential election is just 21 months away, and one potential candidate from Georgia was recently on national television to make an interesting case against incumbent Barack Obama.

Herman Cain, a conservative businessman, motivational speaker, author and former radio talk show host, said on CNN that the president does not fully understand how to help the private sector prosper. Case in point, Cain said, the high corporate tax rates the federal government levies on businesses.

"We need to lower the top corporate tax rates from 35 percent to 25 percent," Cain said Friday on CNN’s "American Morning" program. "We are the only developed country in the world that has not cut its corporate tax rate."

Cain, a Henry County resident who unsuccessfully campaigned for a U.S. Senate seat in 2004, recently started an exploratory presidential committee, the customary first step toward a White House bid. Cain concedes he would be a "dark-horse" candidate, but we’re certain he would get his message out if he runs for president.

So we were curious about Cain’s claim on CNN. Is the United States the only developed country in the world that has not cut its corporate tax rate, the percentage that businesses are taxed by the government?

The best information on the subject comes from the Doing Business Project, which was started in 2002 to examine business regulations across the globe. Its partners include the World Bank.

Each year, the project completes a report that looks at the world’s business climate. AJC PolitiFact Georgia read each one of the project’s Paying Taxes reports, which date back to 2007. During that time frame, we found 48 nations that have cut back their corporate tax rates. The reports do not specify whether the cuts were to statutory rates, which is the taxable income of corporations, or effective rates, which measure the taxes a corporation pays as a percentage of its economic profit.

The larger countries that cut their rates included Canada, China, Germany, Israel, Italy, Mexico, Russia and South Africa. The list included small nations, such as Albania, Colombia, Denmark, the Dominican Republic, Ghana, Morocco and New Zealand. The United States was not among those countries.

During the period covered by the reports, Iceland was the only developed country that raised its corporate tax rate, which increased from 15 percent to 18 percent.

The nonpartisan Tax Policy Center has a chart of America’s corporate tax rate that dates back to 1909. It shows the top rate was at its highest, 52.8 percent, in 1968 and 1969. It was last cut between 1987 and 1988, when Ronald Reagan was president, from 40 percent to 34 percent. The top rate last rose in 1993, to its current rate of 35 percent. Some research shows corporate tax revenue typically increases when the rates are lowered because more businesses pay the rates.

Cain is not the only conservative to call for a lower corporate tax rate. U.S. Sen. John McCain, R-Ariz., proposed lowering the top rate from 35 percent to 25 percent during his failed bid for president in 2008. McCain and others complain that the U.S. has among the highest corporate tax rates in the world. PolitiFact rated a claim by U.S. Sen. Pat Toomey, R-Pa., that America has the world’s highest corporate tax rate as Mostly True.

Obama, by the way, said in last month’s State of the Union address he is open to cutting the top corporate tax rate. The president said in that speech that the U.S. had among the world’s highest corporate tax rates, earning him a True by PolitiFact on the Truth-O-Meter.

Emory University law school professor Dorothy Brown contends this point stressed by Cain and others is a red herring. She and others argue that the federal tax code contains many loopholes for businesses that allow them to pay less in corporate taxes.

"I quarrel whether there is any meaning," Brown said. "The question is so what?"

The big question for us is what time frame was Cain talking about on CNN when he said the U.S. is the only developed country that has notcut its corporate tax rate? The Tax Policy Center chart tells a different story. Efforts to contact Cain via telephone and e-mail were unsuccessful Monday.

It has been a while since the United States cut its corporate tax rate.

But to say the U.S. is the "only developed country" that has not cut its corporate tax rate is not completely accurate. At least one other one -- Iceland -- has raised the rates. Arguments can be made, however, that Iceland is an anomaly when its economy is compared to major players like the U.S.

We believe Cain is trying to make a larger point that many developed countries have lowered their corporate taxes. He argues they should be lowered here in order for America to be competitive with the rest of the world.

There is ample evidence that the U.S. is behind the curve on this front, but not everyone is cutting their rates. We find Cain’s statement, and the larger point he is trying to make, is on-point. But he omits important details in the quest to make that point.

We rate his statement Half True.

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Wisco Project

stated on September 16, 2024 in Social media ads

“If you make less than $100,000, Trump is about to raise your taxes. Currently, you’re taxed at 10% and then 12%. He would raise that to a flat rate of 15%.”