U.s. Corporate Tax Rate Essay

858 Words Jun 26th, 2016 4 Pages
“The U.S. corporate tax rate (35%) is the highest rate amongst the developed nations” (Dubay, 2015). Meaning, that U.S. companies pay a lot more in taxes than foreign companies do. Therefore, if Congress eliminated corporate taxes, Amazon would report a higher income since their earnings will no longer be taxed. This higher income would allow Amazon to partake in more investments such as the purchases of plant assets that they can use to earn additional revenue. Since Amazon would be doing well financially they would be able to provide more jobs as well. This would be a benefit considering that employees would be more productive knowing that they get to keep all of their earnings without any deductions being taken to account for taxes. However, their salary expense on the income statement would increase due to workforce growth. An important thing to note is that if U.S. taxes are eliminated, foreign companies would take on the role of having the higher tax rate thus attracting a lot of foreign companies to invest their earnings in the U.S. in order to take advantage of the non-tax income they could earn. For example, Amazon keeps most of the earnings that its foreign subsidiaries make, outside of the US for investment purposes. Amazon’s 2015 annual report states that $2 trillion of foreign earnings were kept abroad to avoid being taxed when repatriated. However, with the elimination of taxes, “earnings would flow into US further creating an increase in US’ liquid capital…

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