U.S. corporate income tax system and tax policy changes across the world have a great influence on the u.s. corporate tax system and tax policies and tax reform in China is of great significance. This article only the General introduction for theoreticians and comrade engaged in practical work of reference.
Firstly, corporate income tax system reforms and tax policy adjustments in the United States is a federal-state-local multi-stage tax system. The federal tax system is essentially composed of 1913 adopted a constitutional amendment No. 16, established by the corporate income tax was legislation in force in 1909. In the federal tax system, the corporate income tax is always an important taxes, since the early 1950s, the company began to decline in the income tax, corporate tax accounts in 1950, the federal taxation of 26.49% in 1960 to 1970 23.24%, 17.03% in 1970, 12.49% in 1980, after which this proportion falls have increased the minimum time as 1983 6 16 per cent of the overall 10%-11%. Nevertheless, the company income tax is the third tax in United States federal income tax, in addition the personal income tax and social security tax taxes.
The United States, introduced to the market economy as the mainstay of the economy, and the United States has always advocated economic liberalism and individualism are historical and cultural aspects of the relationship between source-Yuan. In the early ‘ 30 ‘s economic crisis and the coming of the great depression, the United States to strengthen national intervention in economic activities, the Roosevelt administration began to expand government spending as the main feature of the "new deal" experiment. To tie in with the "new deal", 1935 to tax reform, which will improve the company’s income tax rate to 15 per cent. The Roosevelt Administration created a tax policy intervention in the economic activities of precedent, as the post-war Western countries implement Keynesian provides experience.
Frome the end of World War II to the mid-1980s, United States of America under the Reagan tax reform of corporate income tax system reforms and tax policies generally go through the following four stages:
The first stage is from 1945-1960. After the second world war, owing to a sharp reduction of military orders, the United States industrial production in sharp decline. In order to stimulate economic development, the Truman administration first adopted a series of tax incentives for the Center for economic and tax policy, focusing on the reduction of personal income tax and inheritance tax and gift tax, but almost no corporate income tax system. During this period, in 1954 the company income tax code, legislation, as far as the Basic code of the corporate income tax.
The second stage is from 1961-1968. 1957-1958, and 1960-1961, American economic crisis occurred twice in a row, the production growth is slow, the unemployment rate rose rapidly. The plight of the economic crisis in the coming of the Kennedy administration developed the famous "Kennedy tax reduction programme", through tax cuts to stimulate aggregate demand, in particular to stimulate consumer demand and investment needs. 1962 company income tax amendment and the "investment tax credit Act", began to capital investment tax concessions and to expand the scope of the accelerated depreciation to encourage enterprises to invest in. In 1964, Congress passed a Bill, which is the highest corporate tax rate from 52% to 48%, and to broaden the scope of the various tax benefits. This period is the Keynesian fiscal and taxation policy in the golden age, but in fact to stimulate aggregate demand as the main objective of the policy was indeed also played the role of the United States to mitigate economic crisis.
The third stage is from 1969-1980. This period for the United States, is a political upheaval, economic stagnation of the era. The Nixon administration was inaugurated in 1969, facing inflation situation, had to take tight fiscal policy and monetary policy, increase revenue and reduce expenditure. But the anti-inflation measures the economic recession, the Nixon Administration had announced in 1971, the new economic policy ", in addition to the expansion of government expenditure in a series of measures, including a considerable number of measures to reduce the tax burden. For example: reduction of personal income and corporate income tax rates, reduced investment in new facilities. In June of 1971 the US Government announced the new accelerated depreciation method, the enterprise equipment depreciation can be reduced by 20%. In early 1972, the US economy began to rebound, inflation has been suppressed. 1977 Carter Administration, seeks to continue to alleviate the tax burden to stimulate aggregate demand, Carter introduced large quantities of tax incentives, expanded the scope of the exemption. As a result, the income tax base has eroded; whereas in order to maintain a certain amount of revenue, tax and must be kept at a certain level, the system becomes increasingly complex, the phenomenon is relatively serious tax evasion.
The fourth stage is from 1981-1987. The Reagan administration in 1981, the u.s. economy is in serious economic recession and high inflation intertwined dilemma, Reagan abandoned categorically Keynesians, adhere to stimulate aggregate supply as the main goal of the new economic policy, dubbed "Reagan economics." Tax reduction is at the core of the Reagan economics and critical. Then Reagan came from, the massive tax reduction programmes, the focus is to reduce personal income tax rate, while expanding the scope of the accelerated depreciation method, generally to reduce various types of asset depreciation, increased investment in new machinery and equipment provided by the credit allowance, etc. Reagan’s economic recovery plan to make the u.s. economy in the long term "stagflation" come out of the mud, but tax relief is the 1983 key for economic recovery. However, the Reagan Administration also believed for many years the United States tax accumulated many problems to resolve, do not yet fully resolved.
Secondly, the United States in 1987 by the corporate income tax system reform in accordance with the supply of school, tax differential treatment of smaller accelerated depreciation and investment tax credits and other tax measures can certainly reduce efficiency loss, but from the perspective of long-term economic development, and overall lower taxes is to stimulate investment and guarantee of total supply. Moreover, the 1982 tax reform shows substantial accelerated depreciation and other measures will also cause reduced tax revenues, the best way is to take into account the overall tax reform in the corporate income tax rates. Thus, from 1983, the Reagan Administration started brewing in the overall tax system reform on corporate income tax with comprehensive direct as the center of the second stage of reform.
1986 "the internal revenue code", in 1987 the reform of corporate income tax mainly include:
(1) a general reduction of corporate income tax rates for an overall reduction of corporate income tax rate is the tax reform key measures. The list is as follows:
table 1
taxable income (US $) the old tax rate (%) the new tax rate (%) 25000 following 15 15
25000 — 50000 18 15
50001 — 75000 30 25
75001 — 100000 40 34
more than 100000 46 34
from table 1, you can directly see the maximum tax rate, is the year net income of more than 10 million of large companies or large companies, medium business tax rate has decreased, the small business tax rate has not changed. Thus, the lower the rate of the biggest beneficiaries are those big companies. This fully reflects the Reagan Administration’s fundamental tax reform, reflects the supply-side economics. Supply-side believes that large capital is the backbone of a market economy,
t
hat the marginal propensity to high, the amount of investment, only reduce their tax burden, it is possible to make the market economy really bring its strength.
(2) Appropriately broaden the tax base for corporate income tax of the Reagan administration in the overall scheme of the tax reform in the basic idea is that the massive reduction of personal income tax rate will be the improvement of payroll taxes, etc. While the corporate income tax revenue is essentially unchanged or to decline to a lesser extent. Thus, in the implementation of a significant reduction in corporate tax rates at the same time, the only viable reform was to "expand the corporate income tax base", that is, reducing the corporate income tax in the concession.
Past use of accelerated depreciation and investment tax credit, in 1982, after the reform of the tax reform 1987 largely untouched. Broadening the tax base of corporate income tax mainly relate to the following parts:
1. cancel the preferential treatment of capital gains, all realized capital gains are applicable to 34%.
2. reduce dividend income tax benefits. The old tax on the dividends received from joint ventures, which allowed revenues ≤85% allowance. New tax law that this tax exemption reduced to 80%, but on small company dividend income tax incentives remain unchanged.
3. strictly controlling the expense account tax-free part of the standard. As the old tax on stock trading transaction costs can be charged, but the new tax law was cancelled. New tax law is also on the "business losses offset method" and "assets of the company’s internal deals", and so do strict control.
The United States in 1987, the tax reform, in particular the reform of corporate income tax for other countries produced strong influence, as a result, has formed the spread in many countries world-wide wave of tax reform.
Thirdly, the current corporate income tax and tax policy in the United States the existing corporate tax by the federal corporate income tax and State corporate income tax, generally speaking, the State in the federal corporate income tax is a tax on corporate income tax plus a certain percentage. Therefore, here are introduced the federal corporate income tax system and tax policies.
(1) of the federal corporate income tax system in 1995, the United States for u.s. companies from across the globe, the proportion of income by multiple rates. Specific criteria are as follows:
table 2
taxable income (US $) tax rate (%)
lower 50000 15
50001 — 75000 25
75001 — 10000000 34
10000000 higher 35
For mainly engaged in the public utility company, applies only to the ratio of 35%.
Corporate income tax on taxable income equal to the gross income minus the deductions permitted. Gross income generally refers to domestic companies from across the globe.
1. depreciation and depletion of American companies income tax property is specified on the life of the level of depreciation and depreciation method. The depreciation period of 3 years, 5 years, 7 years and 10 years of company’s property with 200% (double) method, the balance of the then adopt straight-line depreciation depreciation. The depreciation period of 15 years and 20 years of company’s property with 150% declining balance depreciation method. In addition, the company can obtain most intangible assets for more than 15 years of prorating.
On exhaustible natural minerals and timber can be reasonable for the deduction of depletion, depletion is usually calculated according to the cost of production. Mining and oil and gas wells and some of the rights and interests, and if the prescribed percentage of the gross income calculated depletion than by cost depletion is big, you can calculate the depletion of the former.
2. dividend treatment in certain limited circumstances, companies can get 70% of dividends from its gross income deduction, if you get dividend allocation holders dividend of not less than 20% of the dividend is 80%. Affiliates from the other companies there is associated with the Group dividends may deduct 100% of the land.
3. loss of refund and closing company can net operating losses in the previous 3 years income tax refund and future year carried over 15 years. More than 50% of company ownership changes, changes in the period was limiting the use of net operating losses carried forward and rebate.
(2) the main preferential taxation restrictions and is not in favour of the United States tax preferential countries, tax benefits for the company’s relatively small. The main tax preferential policy including:
1. company for State and municipal governments and the public debt interest is exempt from federal income tax, you can.
2. company employment reached the "goal" group the number of people required, you can enjoy a certain amount of the tax credit.
3. research and laboratory fees may apply for credit, the credit for qualified research expenses by 20%. In the United States engaged in the study of increased costs, you can also enjoy additional tax credit.
4. companies can take control of contaminated equipment costs and other expenses related to, over the next 5 years off.
5. years ago and built in 1936, was confirmed as historical buildings and non-residents in the construction of major repair costs, you can enjoy the tax credit.
6. in exceptional, economically disadvantaged areas, employment of local residents, companies, partnerships and sole proprietorships, may apply for the enjoyment of investment incentives, including immediately reversed some kinds of production investments, employee wages tax credit and tax exempt bonds.
7. small business offers. In order to encourage small business investment, the u.s. Government provides some benefits, one of the most important thing is: investors to sell "qualified small business stock" earned revenue of 50% of the allowance, but holders of small enterprises (the total assets and not more than 5 million company) shares of time must be for a period of five years.
8. export sales company. In some regions, with an export company of u.s. exporters, the export of products they sell (usually products manufactured by us or the production of) the income gained as part of the tax exemption of the United States. For many u.s. manufacturers, allowance may achieve their export income of 30%. Export marketing companies outside the United States must maintain a presence and some administrative functions must be performed outside the United States.
9. domestic corporations. For export sales of $ 1 million dollars of u.s. exporters, constituted domestic cross-marketing company. For many u.s. manufacturers, their export earnings of 47 percent of u.s. corporate taxes can be postponed, as long as domestic corporations to deferred income from investments in qualifying assets or to meet other requirements. For u.s. export products wholesaler, postponed from corporation tax in the United States can be as high as 94% of export earnings. But deferred tax, must be based on a one-year US Treasury 76 u.s. corporate income tax system and tax policy in the coupon interest rate, payment, interest. Domestic cross-border sales company than export sales company has a greater proportion of export earnings exemption period in the United States tax, but the domestic corporations can only be deferred, and do not allow companies like export sales for permanent exemption.
10. United States territory of manufacturing. In some cases, the u.s. company may enjoy equal to it in the United States territory are actively operating activities are taxable income and sources in certain territories of investment income taxes payable by a certain percentage of the tax credit. In order to obtain this credit, the company’s gross income of 80% or 80% in three years, must come from a territory and its 75% of the gross income must be on a
territory of active business income. Does not meet the criteria of income tax during the period, of course, this kind of income to give ordinary foreign tax credit. For intangible assets transferred to a Dominion company as well as the resulting from the use of special requirements.
On non-resident investment restrictions. In addition to the need to report and pay the withholding tax, the US Government to non-resident investment has almost no restrictions. However, it is worth noting that if you are considered a threat to national security, the u.s. Government can suspend or ban on American businesses were merged or foreigners.
Fourth, the US current preferential taxation policy evaluation.
United States have experienced has, by propagating the changes to the brief, this change is the change of tax theory and cohesive. Early American capitalism, and liberal on economic activity taken a hands-off policy, therefore, the application of the tax policy. Later, the United States tax theory and has pursued a Keynesian economic intervention, with tax policy intervention in the economy, in order to achieve the Government’s stated objectives. However, with the Keynesian bankruptcy, supply-side economics gradually gained the upper hand, tax theory is changed. Modern tax theory believes that tax policy effectiveness was limited, and each of these tax incentives will produce tax loopholes. In order to plug the loophole in the tax, the tax system will become increasingly complex, which in turn caused the loss of tax efficiency, and tax incentives in the tax efficiency loss as the price, so you want to use preferential tax policies. Therefore, throughout the United States tax preferential policy, it should be said that there are several characteristics:
(1) offers simple current u.s. tax preferential policy of the company mainly tax exemptions and credits. Several duty-free items at a glance, as long as they meet the requirements of the enterprise, you can receive tax benefits; several credit project is a direct credit, operational and convenient.
(2) targeted the United States the existing corporate tax incentives for only two main goals, one is the common social objectives and the other on the encouragement of investment goals. Although small businesses provide tax benefits, but this is from the perspective of encouraging investment. A limited number of preferential tax policies that minimize interference due to tax economic activities which result in the loss of efficiency.
(3) focus on the effect given to the effect of tax incentives, in most cases take credit, but avoid direct tax-free. Because companies must engage in the activities of the Government’s request to the appropriate tax credit policies, tax policy can be effectively implemented and enforced.