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The US, with one of the highest corporate income tax rates in the world at 38.5 percent, collects only 2.9 percent of GDP in corporate tax revenue, less than in Canada where corporate income tax rates are lower. [...] However, even if Canada were to reduce its corporate income tax rate to the revenue-maximization rate, the rate would still be far too high: the inter-asset and inter-industry distortions induced by corporate taxes suggest that the optimal corporate rate should be set below the revenue-maximizing rate when trading off revenues for economic efficiency and fairness. [...] The first would be to substantially reduce personal and corporate income tax rates, with part of the fiscal costs offset by the tax revenues generated from a broader tax base. [...] Further reductions below the revenue- maximizing tax rates would need to trade off, on one hand, the benefits of raising taxes to fund public services and, on the other hand, the benefits of reducing economic distortions caused by the corporate tax system. [...] C. D. Howe Institute Commentary 15 Box 2: An Estimate of the Revenue-Maximizing Corporate Income Tax Rate To estimate the revenue-maximizing corporate income tax rate, we regressed corporate income taxes as a share of GDP by country for 27 OECD countries and by years for the period 2001-2005 on independent variables as listed in the table below.