US has highest effective corporate tax rate in developed world

Geoffrey Lawrence

A new report from the Cato Institute shows that the average effective corporate tax rate in the United States is now 35.0 percent. That is the highest rate in the OECD and nearly double the OECD average of 19.5 percent. Effective corporate tax rates are important because US firms must compete for capital on an open, global market. Higher effective corporate tax rates place the US at a disadvantage because it damages the profitability of investment in the US relative to other nations.

What’s more, state Senate Majority Leader Steven Horsford has placed new corporate tax levies on the table for the 2011 legislative session here in Nevada. Given that any new state levies will only compound already existing federal levies, this initiative would certainly deter future investment in the Silver State as private firms in Nevada must also compete for capital on a global marketplace.

Lawmakers need to thoroughly consider the long-term economic implications of creating an even more punitive tax environment in Nevada before they convene in Carson City next year. They should probably all get a copy of this book and read it from cover to cover.

Then, when they wonder how the state can meet its fiscal challenges without resorting to corporate tax increases that would divert long-term investment away from the Silver State, we’ve got a tutorial on where to begin.

Geoffrey Lawrence

Geoffrey Lawrence

Director of Research

Geoffrey Lawrence is director of research at Nevada Policy.

Lawrence has broad experience as a financial executive in the public and private sectors and as a think tank analyst. Lawrence has been Chief Financial Officer of several growth-stage and publicly traded manufacturing companies and managed all financial reporting, internal control, and external compliance efforts with regulatory agencies including the U.S. Securities and Exchange Commission.  Lawrence has also served as the senior appointee to the Nevada State Controller’s Office, where he oversaw the state’s external financial reporting, covering nearly $10 billion in annual transactions. During each year of Lawrence’s tenure, the state received the Certificate of Achievement for Excellence in Financial Reporting Award from the Government Finance Officers’ Association.

From 2008 to 2014, Lawrence was director of research and legislative affairs at Nevada Policy and helped the institute develop its platform of ideas to advance and defend a free society.  Lawrence has also written for the Cato Institute and the Heritage Foundation, with particular expertise in state budgets and labor economics.  He was delighted at the opportunity to return to Nevada Policy in 2022 while concurrently serving as research director at the Reason Foundation.

Lawrence holds an M.A. in international economics from American University in Washington, D.C., an M.S. and a B.S. in accounting from Western Governors University, and a B.A. in international relations from the University of North Carolina at Pembroke.  He lives in Las Vegas with his beautiful wife, Jenna, and their two kids, Carson Hayek and Sage Aynne.