Competitive Framework for Alaska: 2012

Deficiencies Excessive Tax rates The combination of the maximum ACES rate of 75% and the normal corporate income tax rate (state and federal) of 41% creates a combined tax rate of 85.25% under high prices. Such an excessive tax rate reduces significantly the incentive for companies to be efficient because they can only keep $ 0.1475 of every dollar saved. This means the cost savings index is only 14.75%. This is well below the cost savings index of most countries. Usually, it is recommended to have a cost savings index well over 20%. It should be noted that the combined tax rate of 85.25% is in addition to the regular royalties. 61

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