The average U.S. corporate tax rate fell more than half to 7.8 percent after the 2017 Republican tax overhaul. That’s according to a new report that looked at the 2018 tax year and the average rate fell from 19.7 percent in 2017 to 13.1 percent.
The report, issued by the official Joint Tax Committee, also states that companies continue to use offshore tax havens like Bermuda to reduce tax burdens. In fact, about 10 percent of foreign company profits are posted in Bermuda, where they pay a low tax rate of 0.4 percent.
On the other hand, many companies have also invested in important markets such as China, Canada, Germany and Mexico, all of which have significantly higher tax rates. In addition, 10 percent of foreign company employees were located in India, where companies had to pay an average tax rate of 40 percent.
“GILTI,” a tax introduced by Republicans to target money tucked away in low-tax areas, has been reasonably successful in raising corporate tax rates, with corporations paying an average of 16 percent of GILTI income.
Democrats like the Senate CFO Ron Wyden (D-Oregon) are pushing for regulations like GILTI to be made even stricter, especially given the large spending-spending initiatives currently being pushed by Democratic lawmakers.
Democrats have argued that the GILTI rate of 5.5 percent is too big a discount for businesses, especially when compared to a domestic tax rate of 21 percent.
Read more about: