America is stuck in the middle of a corporate tax nightmare. While the rest of the industrialized world has realized that low corporate tax rates are necessary to succeed in the twenty-first century global economy, America continues to miss the boat.

According to a study released by the Cato Institute in February 2011, the effective corporate tax rate of 34.6 percent in the U.S. is the highest rate in the Organization for Economic and Cooperation and Development (OECD) and is nearly 50 percent higher than the OECD average. A March 16, 2010 Daily Caller article noted that since 2000, Canada, Germany, Greece, Iceland, Ireland, Poland, the Slovak Republic, and Turkey have all implemented double-digit reductions in their corporate tax rates. If the U.S. hopes to deter American businesses from moving abroad, attract new foreign business investment to its shores, and be more competitive in the global marketplace, Congress needs to reduce the corporate income tax rate.

Unfortunately, many American companies have already transitioned large portions of their business operations to friendlier tax environments overseas. A March 25, 2011 episode of 60 Minutes pointed out that, “Six hundred American companies are in Ireland and they employ 100,000 people. Those are jobs that aren’t here, and they moved to Ireland because of taxes.” In the same episode, Cisco Systems CEO John Chambers noted that, “If you have a 35 percent rate in the United States and, for example, a 12.5 percent rate in Ireland, there is an incentive to move your factory to Ireland.” Under the current onerous corporate tax structure, the U.S. Treasury is essentially subsidizing American investment abroad.

The fiscal year 2012 budget resolution passed by the House on April 15, 2011 includes a proposal to cut the corporate tax rate by 10 percentage points to 25 percent. In his January 2011 State of the Union address, President Obama proposed eliminating loopholes in the tax code and using the savings to lower the corporate tax rate. The Bowles-Simpson fiscal commission, created in 2010 by President Obama, recommended a single corporate tax rate of 26 percent in their report.

A November 2010 report by the OECD found that “corporate taxes are the most harmful type of tax for economic growth.” Instead of losing business investment to other nations, the U.S. could decrease the corporate tax rate, stimulate economic growth and investment, and create jobs at home. If Congress truly wants to demonstrate that it is serious about putting the nation on a path toward growth, competitiveness, and fiscal sustainability, the corporate tax rate should be cut as soon as possible.

-- P.J. Austin