Fact Check: "The U.S. corporate tax rate was reduced from 35% to 21% in 2017."
What We Know
In December 2017, the U.S. Congress passed the Tax Cuts and Jobs Act (TCJA), which significantly reformed the federal tax code. One of the most notable changes was the reduction of the corporate tax rate from 35% to 21% (Wex, source-3). This change aimed to stimulate economic growth by making U.S. corporations more competitive internationally and encouraging domestic investment (Brookings, source-4).
Prior to the TCJA, the U.S. had one of the highest statutory corporate tax rates among developed countries (Harvard Law School, source-1). The reduction to 21% was intended to align the U.S. corporate tax rate more closely with those of other OECD countries, which typically have lower rates (Tax Policy Center, source-7).
Analysis
The claim that the corporate tax rate was reduced from 35% to 21% is supported by multiple credible sources. The Government Accountability Office (GAO) confirmed that the TCJA lowered the top statutory corporate tax rate from 35% to 21% (GAO, source-2). Additionally, the Wex legal resource provides a detailed overview of the TCJA, reiterating that the corporate tax rate was permanently reduced to 21% (Wex, source-3).
While the TCJA included various provisions that affected effective tax rates and tax liabilities, the statutory rate change is clear and well-documented. The effective tax rates, which account for deductions and credits, fell from 16% in 2014 to 9% in 2018 among profitable large corporations, indicating that while the nominal rate decreased, the actual tax burden varied due to other factors (GAO, source-2).
The sources cited are reliable, including government reports and established legal resources, which lend credibility to the information presented. The GAO report is particularly noteworthy as it is based on extensive analysis of IRS data and interviews with tax experts (GAO, source-2).
Conclusion
Verdict: True
The claim that the U.S. corporate tax rate was reduced from 35% to 21% in 2017 is accurate. The TCJA enacted this significant change, which has been confirmed by multiple credible sources. While the effective tax rates may have fluctuated due to various provisions within the TCJA, the reduction of the statutory rate is unequivocal.
Sources
- Lessons from the Biggest Business Tax Cut in US History
- Corporate Income Tax: Effective Rates Before and After 2017 Law Change
- Tax Cuts and Jobs Act of 2017 (TCJA) | Wex | US Law | LII / Legal
- Did the 2017 tax cut—the Tax Cuts and Jobs Act—pay for itself?
- How did the Tax Cuts and Jobs Act change business taxes?
