NCPA - National Center for Policy Analysis

United States Ranks 32nd out of 34 on International Tax Competitiveness

September 16, 2014

The Tax Foundation has published its 2014 report on international tax competitiveness. Looking at the tax codes of the 34 countries within the Organization for Economic Cooperation and Development (OECD), the report's authors Kyle Pomerleau and Andrew Lundeen analyzed corporate, consumption, property and individual taxes, as well as international tax rules.

A strong tax code is critical to investment, and countries with low and stable tax rates are more likely to attract businesses.

According to the report, Estonia has the most competitive tax system within the OECD. Estonia's corporate tax rate is 21 percent -- much lower than the United States, which has the highest corporate tax rate in the industrialized world -- and it does not tax dividend income twice. Its flat corporate tax rate, combined with a property tax that only taxes land, not buildings and structures, pushed Estonia to the top of the list.  

Other countries that scored high marks included:

  • New Zealand, based on its flat and low income tax that does not tax capital gains.
  • Switzerland, partly due to its 21.1 percent corporate tax rate and exemption of capital gains from the individual income tax.
  • Sweden, as it does not impose estate or wealth taxes.

Worst among the OECD was France, with a 34.4 percent corporate tax rate as well as highly progressive individual taxes that hit capital gains and dividends. But the United States was not far behind France, taking the 32nd spot out of 34. Of all OECD countries, just six -- including the United States -- have a worldwide system of taxation. Additionally, the United States received poor scores based on its double taxation of capital gains and dividends, as well as its burdensome estate tax.

Source: Kyler Pomerleau and Andrew Lundeen, "2014 International Tax Competitiveness Index," Tax Foundation, September 15, 2014. 

 

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