Over the past four decades, corporate tax rates have been on a downward trajectory. Graham Buck examines why 2020 could mark a watershed when that trend starts to reverse
Those of the baby boomer and Generation X eras might remember 'The Only Way Is Up', a strident anthem from the late 1980s by the singer Yazz. It reflected hedonistic times when the price of everything from property to works of art such as Van Gogh’s Sunflowers was heading steadily higher. One notable exception was corporate tax rates, which were already heading in the opposite direction. ‘The Only Way is Down’ more appropriately describes their trajectory over the past four decades. In September 2019, the International Monetary Fund (IMF) reported in Tackling Tax Havens that average corporate global tax rates have halved since 1985, from 49% to 24%.1
Contributing to the decrease was the introduction of the US Tax Cuts and Jobs Act (TCJA) in 2017. Signed by US President Donald Trump three days before Christmas, it reduced the US corporate tax rate from 35% to 21%.
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