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Originally Posted by jyl
Detailed info on corporate tax rates in different countries.
http://www.kpmg.com/SiteCollectionDocuments/Corporate-and-Indirect-Tax-Rate-Survey-2008v2.pdf
For the total tax rate, look at both the direct tax (corporate income tax) and the indirect tax (VAT, sales taxes, etc). The US appears to have a high direct tax rate (using the "headline" figure of 35% top federal statutory marginal tax rate) but also has a low indirect tax rate (shown as "*" in the table, is about 7-8% if you average out the various state's sales taxes).
Also, for the direct tax, look at both the headline or statutory rate, and the effective rate which is what US companies are actually paying in corporate income tax. The effective rate is 22%. US companies, on average, do not actually pay anywhere near the headline rate.
Tax Analysts: Featured Articles: The Effective Corporate Tax Rate Is Falling
If you use the effective rate of 22%, then the US corporate direct tax rate is actually pretty low compared to the rest of the world, and the total US tax rate (direct + indirect) is also low in comparison.
Naturally, the advocates of lowering US corporate tax rates never tell you about the effective rate, they prefer to talk about the headline rate even though on average US companies don't actually pay it.
What I don't have right now is a comparison of effective tax rates across the globe. I vaguely recall finding and posting that info once, so good search skills might turn it up. |
By only looking at CIT, you are missing a lot of other direct taxes. Real Estate, Payroll tax, etc, which go into the cost of doing business and are a direct factor in the cost of products.
Then there are the indirect costs and taxes - taxes already in supplies purchased internally, compliance with regulations, etc.
When you add it all up, the tax and compliance portion of the bill is much higher in the USA than the direct labor costs. When I reviewed this in Romania, the tax saving was three times the labor savings, for relocating a business.
Remember, VAT is a hidden sales tax. The end user pays in a higher cost of a product. The one advantage of VAT is that importated items usually have VAT applied to the on importation, so at least local goods are competing on a level playing field.