WASHINGTON The United States should cut corporate taxes to spur economic growth and sharpen U.S. companies' competitive edge in the world market, U.S. Treasury Secretary Henry Paulson said on Thursday.
"The current tax code distorts capital flows, hurting productivity, job creation and our global competitiveness," Paulson in an opinion piece published in the Wall Street Journal. "Next Thursday, I will host a conference that will begin a new, broad examination of our business tax system."
Paulson credited 1986 U.S. tax reforms that lowered individual and corporate tax rates for "20 years of remarkable economic performance in the U.S. and around the world."
But today the United States' corporate levies ranks among the highest among the 30 nations in the Organisation of Economic Cooperation and Development (OECD), a Paris-based group which encompasses the world's industrialized nations.
"We now have, on average, the second-highest statutory corporate tax rate (including state corporate taxes), 39 percent, compared with an average rate of 31 percent for our top competitors," he said.
"A study by Treasury economists estimated that a country with a tax rate one percentage point lower than another country's attracts 3 percent more capital. It's not surprising then, that average OECD corporate tax rates have trended steadily downward," Paulson said.
The current U.S. corporate tax system burdens companies at a time when the fast-changing global marketplace demands they be "ever more flexible and swift," he said.