September 18, 2008
Global Survey of Business Tax Rates Show U.S. Increasingly Uncompetitive
KPMG Study Shows American Corporate Tax Rate Trending Well Above International Average
Washington, DC, September 18, 2008 - KPMG, a well-known international accounting firm, released its annual survey of corporate and indirect tax rates for 2008, showing that the U.S. corporate income tax rate was higher than all other global regions, 14.1 percentage points higher than the global average and nearly 17 percentage points higher than the average among European Union nations.
In Tax Foundation Fiscal Fact No. 145, "KPMG Study Finds U.S. Corporate Tax Rate Higher Than Every Global Region," Tax Foundation President Scott Hodge explains that America's stagnant business tax system is potentially harmful to America's economic competitiveness in the global marketplace.
"Of the 106 countries surveyed, only the United Arab Emirates (55 percent), Kuwait (55 percent), and Japan (40.69 percent) impose a higher corporate tax rate than the combined rate of 40 percent in the U.S.," says Hodge. "What this says about America's tax competitiveness is not good."
According to the KPMG report, 23 countries have lowered their corporate tax rates this year, and no nation has raised its rate since last year. Last week, for instance, Sweden announced a series of proposals to improve its business climate, including a plan to cut its corporate tax rate from 28 percent to 26.3 percent. A September 17, 2008 Industry Week article, "Sweden Announces Income Tax Cuts to Boost Jobs," explains, "Since coming to power in the autumn of 2006, the Swedish government has launched a series of measures aimed at inciting Swedes to return to the job market instead of living off of state subsidies."
"The U.S. rate was higher than all other global regions in 1999 and the difference is even more dramatic today," Hodge states. "If the Swedes now recognize that taxes matter to a country's business climate and incentives to work, then when will America's political class?"
This KPMG survey comes on the heels of the Tax Foundation's CompeteUSA project, a campaign to raise public awareness of America's high business taxes and how our business tax system might be affecting our competitiveness, wages and living standards.
Recent OECD studies show U.S. corporate income taxes are 50 percent higher than the average among our counterparts in the industrialized world, and that corporate taxes are the single most harmful tax to GDP growth, more so than personal income taxes or consumption taxes. Last month, the Tax Foundation released a revised summary showing that the U.S. federal corporate income tax quietly taps family pocketbooks for nearly $370 billion per year in the form of higher prices, lower wages and poorer return on investment.
To learn more about the CompeteUSA project, go to http://www.taxfoundation.org/competeusa.
The KPMG survey can be found at http://www.kpmg.com/SiteCollectionDocuments/Corporate-Tax-Rates-Survey-2008b.pdf.
Fiscal Fact No. 145 can be found at http://www.taxfoundation.org/publications/show/23621.html.
The Industry Week article can be found at http://www.industryweek.com/ReadArticle.aspx?ArticleID=17335.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
###
To schedule an interview to discuss the Tax Foundation's CompeteUSA project and corporate income taxes, please contact Matt Moon, the Tax Foundation's Manager of Media Relations, at (202) 464-5102.