Corporate tax

Corporate taxes are levies assessed against business rather than individuals. Corporate taxes can take many forms: income taxes, real and personal property taxes, value added taxes, license fees, royalties and payroll taxes.

Some economists compare countries based on the tax burdens that corporations must pay. Economists try to consider the "effective tax rate" of a nation based on the amount of money collected divided by the income of the business. The effective tax rate is usually different than the maximum tax rate set in the nation's tax laws because corporations may deduct certain expenses from their gross income before paying income tax. Payroll or value added taxes can raise the tax burden of companies beyond their income taxes.

United States

The United States imposes a corporate income tax on most corporations. However, many corporations do not pay such taxes. For example, small businesses can elect to be "Subchapter S Corporations" where the tax burden is transferred to the owners to pay as a part of their personal income tax. Other corporations are exempt from federal taxation under Section 501 of the Internal Revenue Code. Many individual states and local government also assess taxes including income taxes, sales taxes, real and personal property taxes and annual fees and business license fees.

"The United States has the highest corporate tax rate in the world at 35 percent, which puts U.S. companies at a competitive disadvantage with other countries that have lower rates (e.g. Canada at 15 percent, Ireland at 12 percent, Bulgaria at 10 percent and so on). As a result, U.S. companies are forced to move some of their operations into other countries in order to remain competitive."