Well, is the U.S. tax system competitive? Many global companies say it isn’t. In his recent Senate testimony,
Apple AAPL -0.23% CEO Tim Cook distanced Apple from tax gimmicks, but the Senate Permanent Investigation Subcommittee report on Apple paints a grim picture. Many companies are even more aggressive and say our tax system is at fault. See Apple: Think Different. Tax Different.
Individuals complain too. U.S. citizens and permanent residents must report their worldwide income. Of late, that rule has landed many in hot water. See
Forget Wesley Snipes–Judge Gives ’5 Second Probation’ In $21M Tax Case. Americans living abroad and dual citizens are hit especially hard. See Expats Lobby For Tax on Residence, Not Worldwide Income.
Don’t believe them?
Sara Keller and Deborah Schanz are German economists, but you have to hand it to them for their media savvy. They rate tax systems, good, bad and ugly. Everyone loves rankings. They have their own terminology too. See Measuring Tax Attractiveness Across Countries.
Their Tax Attractiveness Index
reflects the attractiveness of a country’s tax environment and the tax planning opportunities it offers. Like a kind of beauty pageant, their Tax Attractiveness Index covers 16 components of tax systems. OK, there is no tax system swimsuit competition.
They look at statutory tax rates, how dividends and capital gains are treated, withholding taxes, group tax regimes and more. They consider double tax treaties, thin capitalization rules, and controlled foreign company rules. But how they stir the pot to achieve rankings is no mere Gestalt approach.
The authors painstakingly quantify each tax factor. The Tax Attractiveness Index embraces 100 countries and examines 2005 to 2009. By comparing the Tax Attractiveness Index with the statutory tax rate, the authors claim, they can show that even high tax countries can offer favorable tax conditions.
Clearly, then, mere tax rates don’t reveal a country’s tax climate. There are many other factors besides rates. And how do we Americans stack up in the tax rankings?
Not well. Try 94 out of 100, just below Zimbabwe. Even Japan beat us, coming in at a rousing 92nd. On the brighter side, we might be mollified to know that we did beat a few. As
Daniel J. Mitchell notes here, America’s Corporate Tax System Ranks a Miserable 94 out of 100, “the ‘good news’ is that we beat out Argentina and Venezuela, two of the world’s most corrupt and despotic nations.”
This entry was posted in
. Bookmark the