The combined state and state corporate income tax rate in Minnesota would reach 35.1 percent, according to President Joe Biden’s infrastructure plan, a tie for the third highest tax among the 50 states, according to a new study by the Tax Foundation.
U.S. companies currently pay a corporate tax rate of 21 percent to the federal government, the Tax Foundation reported, but they also pay additional corporate taxes in 44 states and Washington, DC. Corporate tax rates range from zero to 11.5 percent, and the combined average of amounts paid by companies is 25.8 percent, according to the study.
Corporations based in six states – Ohio, Nevada, South Dakota, Texas, Washington, and Wyoming – don’t pay state income tax, though they must pay their stake to the federal government, according to the Tax Foundation.
Biden’s proposal would set the US combined corporate tax rate at 32.4 percent, which would be the highest rate under the Organization for Economic Co-operation and Development (OECD). The group includes nations in North America and Europe as well as Australia and New Zealand.
Such an increase in the US corporate tax rate would, according to the Tax Foundation, incentivize companies to leave the US and reduce workers’ wages and economic output.
However, US companies have the option to deduct corporate tax paid to states, which lowers their federal corporate tax rate, according to the study.
Combined corporate tax under the Biden Plan
|Status||Combined state, national corporate tax rate under the Biden Plan||Rank (highest to lowest)|
|New Hampshire||33.5%||15 (tie)|
|new York||32.7%||22 (tie)|
|West Virginia||32.3%||27 (tie)|
|South carolina||31.6%||35 (tie)|
|South Dakota||28.0%||45 (tie)|