Eliminate corporate tax, says new report

Published: 04:00, August 6, 2014

According to a new report, if the US were to eliminate corporate tax, gross domestic product (GDP), real wages, domestic investment and national saving would increase. The author believes that America’s high corporate tax rate, the highest in the world, discourages both domestic and foreign companies from investing or operating within the country.

Corporate tax, also known as corporate income tax, is the tax that companies pay their government on their profits.

Study author, Laurence J. Kotlikoff, Senior Fellow at the National Center for Policy Analysis and also director of the Tax Analysis Center, says that either the elimination or even the reduction of the current corporate tax rate would benefit workers, the national economy and businesses.

According to Kotlikoff’s study – Abolishing the Corporate Income Tax Could Be Good for Everyone – if America were to eliminate corporate income tax:

  • There would be a 23% to 27% increase in capital stock, with most of the addition coming in from abroad.
  • Real wages would rise by between 12% and 13%.
  • GDP would grow by 8% to 10%.

Even a tax reduction would boost GDP and wages while at the same time producing just as much revenue, he adds.

Eliminating Corporate Tax

(Source: National Center for Policy Analysis)

Tax reduction or elimination would benefit the US

Kotlikoff said:

“A substantial, but still limited, roughly revenue-neutral reduction in the U.S. corporate tax rate produces growth effects that are pretty close to those arising under the complete elimination of the U.S. corporate income tax.”

Kotlikoff explains that if America’s corporate tax rate were reduced to 9%, and certain loopholes were plugged, the result would be:

  • A short-term increase in wages for both high- and low-skilled workers of 6%.
  • A long-term wage increase of 9% for high- and low-skilled workers.
  • An instant and permanent increase of 6% to GDP.
  • Growth of capital stock of 17% in the short-term and 30% more by 2040.

The current tax system drives investment out of America “with surprisingly small benefit in terms of government revenues,” Kotlikoff points out. “Eliminating the U.S. corporate income tax has great potential to make all Americans better off,” he said.

America today is a high-tax nation

Several studies have argued that the current US corporate tax system encourages companies to keep their money abroad. In May, the Council of Foreign Relations showed that American companies are motivated to either not repatriate their profits made abroad or move their headquarters to a foreign country.

Corporate Tax Rates

(Source: KPMG) The US has the highest corporate tax rate in the world, higher even than in left-wing France.

In May, Google told regulators that its $30 billion acquisition fund would stay abroad. By keeping it overseas the company avoids paying hefty US taxes on it.

Veronica Salvador Avatar

Other News

Bank Rate held at 3.75% in the UK as energy prices sharpen inflation risk

Sep 17, 2026

East African Community trade reaches $52.3bn as exports drive surplus

Sep 16, 2026

Canada says its investment summit mobilised nearly C$500bn. What does that actually mean?

Sep 16, 2026

May Mobility agrees $1.4B SPAC deal, bets on asset-light robotaxi model

Sep 16, 2026

Fed raises rates to 3.75% to 4.00% as inflation remains elevated

Sep 16, 2026

IBM-backed Anderon finalizes up to $1B US quantum foundry award

Sep 16, 2026

WTO puts the cost of trade fragmentation at up to 10% of global GDP

Sep 15, 2026

Salesforce launches Koa, a CRM reasoning model built on Nvidia’s Nemotron

Sep 15, 2026

Could humanoid AI companions ever replace human partners?

Sep 15, 2026

IEA forecasts record global coal demand after gas prices climb

Sep 15, 2026

UK government to pursue public acquisition of Speciality Steel UK

Sep 15, 2026

IMF says global current-account gaps widened in 2025, led by China and the United States

Sep 14, 2026

Alan Lovell takes over as British Steel chair as government pursues turnaround

Sep 14, 2026

Plumbing or college: weighing pay, training and AI exposure

Sep 13, 2026

Why more advanced VR equipment does not always feel more real

Sep 13, 2026

VR pilot training shows promise before a student’s first real flight

Sep 13, 2026

Family businesses face a gap between succession plans and readiness

Sep 13, 2026

EU keeps battery recycling targets as industry prepares for tougher recovery rules

Sep 13, 2026

UK firms report patchy recovery while hiring plans stay flat

Sep 13, 2026

Positron wins new backing for an AI chip built around cheaper memory

Sep 13, 2026