Taxes: US taxes vs. foreign taxes

THE US already enjoys a lighter tax burden than its West European and Japanese counterparts. Under President Reagan's tax-reform plan that advantage would remain and in some cases grow.

Some analysts say the lighter US tax burden is a key reason why its economy has outperformed Europe's. But Mr. Reagan's tax plan would not necessarily produce a clear change in the US international competitive position. ``You can't make that leap,'' says Charles R. Hulten, research associate at the Urban Institute. Studies show a ``very complicated link'' between lower taxes and an improved economy.

US manufacturers say their exports could be hurt by the plan's elimination of the investment tax credit and the ``windfall'' tax on previous depreciation benefits. National Association of Manufacturers Vice-President Paul Huard says the Reagan plan poses a significant threat to ``the ability of US-based manufacturing concerns to compete effectively in the world economy.''

Precise comparisons of international tax law are tricky; the subject is highly complex. But on individual taxes, the Reagan plan proposes a maximum rate of 35 percent on income greater than $70,000. By contrast the maximum rate in West Germany of 56 percent kicks in at $42,000. In Britain the maximum rate of 60 percent begins to bite at $48,000. In Japan the maximum 70 percent rate takes effect at $318,000 while allowing fewer deductions. Japan also levies heavy local taxes.

On corporate taxes, Reagan would impose a top rate of 33 percent on income greater than $345,000. In Germany the maximum rate is 56 percent, while in Japan it is 42 percent on most income. British companies pay a flat 40 percent rate, which will drop to 35 percent next spring.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK