US Ranked 102 in Total Tax Rate Survey

by: Mark Perry posted on: April 08, 2008    

From the World Bank and PricewaterhouseCoopers study "Paying Taxes 2008: The Global Picture":

The Paying Taxes Study involves gathering information on the tax affairs of a standard case study company in 178 countries, by reviewing the financial statements and a list of transactions of a standard modest-sized firm. This information is used to generate three indicators related to the number of tax payments, the time taken to comply with its tax affairs, and the tax cost. These are equally weighted to produce an overall ranking for each country for the ease of paying taxes.

From the Executive Summary:

The results show that tax reform is widespread. This year 31 countries improved their tax system and 65 have done so over the past three years.

  • Reducing corporate income tax was the most popular reform.
  • However, many countries have made changes to reduce the compliance burden by simplifying or eliminating other business taxes.
  • Total tax rates have been in a downward trend during the period in which Paying Taxes data has been collected.

Rankings for the United States:

Total Tax Payments: Rank #21/178 (10 different tax payments)

Total Tax Rate: #102/178 (46.2% total tax rate)

Time to Comply: #122/178 (325 hours)

Overall Ranking for the Ease of Paying Taxes: #76/178

Comment: Before American politicians consider imposing higher taxes on U.S. corporations, they should keep in mind that there are 101 countries that have a lower total tax rate than the U.S., 121 countries with a lower time to comply for corporate taxes, and 75 countries have a lower overall ranking for "ease of paying taxes."

Further, the global trend is towards LOWER total tax rates. In today's highly globalized economy, the mobility of capital, talent, investment and production is greater than ever, and they will move to where they receive the best tax treatment. As the NCPA points out: "Despite the popular perception of America as a land of laissez-faire," this World Bank study tells a much different story of an economy with an uncompetitive, high corporate tax burden.

This article has 2 comments! Add yours below...

Mark J. Perry, Ph.D.

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This article has 2 comments:

  •  
    Jack K
    Apr 08 06:02 AM
    Not surprised to hear this. Too many rich socialists out there telling everyone to raise taxes for the good of the country.
  •  
    NO DooDahs
    Apr 08 10:39 AM
    My Website
    The taxation rates are misleading, for a variety of reasons. The main reason is the logistical impossibility of assessing ALL taxes, including city taxes, property taxes, sales taxes, VAT, state and subjurisdiction income taxes, etc. Don't forget the deficit/inflation tax, which doesn't show up as a receipt but does indeed take spending power away from the people and put it in the hands of the government.

    The flaw in the WB/PWC study is similar, because they look at the taxes "paid" by a corporation. Listen to me now and believe me later, corporations DON'T PAY TAXES. They COLLECT TAXES and pass them on to their customers. Only INDIVIDUALS pay taxes. Therefore, a country with a scheme that is "better" from the POV of their "modest-sized firm" may actually be a worse abuser, tax-wise, than some other country that didn't do well on this study. They are looking at only PART of the picture.

    I believe the only aggregate method that would work for evaluating tax regimes, from a logistical and equitable standpoint, is to measure SPENDING by total government (including local municipalities), in relation to total income for the population. That captures all the taxation, including the inflation/deficit taxation, and captures all the population that is taxed.
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