US Not so Competitive When It Comes to Taxes
The Tax Foundation has released the latest edition of its International Tax Competitiveness Inc. which shows that the US ranks only 21st in the developed world for tax competitiveness.
A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities. In contrast, poorly structured tax systems can be costly, distort economic decision-making, and harm domestic economies, explains the Foundation.
While the U.S. tax system has become more competitive in recent years, it still ranks in the bottom half of developed countries and behind what are often considered high-tax countries like Sweden (#7) and regional competitors like Canada (#18) due to several uncompetitive features:
* A progressive individual income tax with a top rate of 46 percent, including payroll and personal income taxes.
* A partial territorial system that doesn’t exempt foreign capital gains income (one of the most onerous international tax systems of any OECD nation).
* Among the strengths of the U.S. tax system is the allowance of full expensing for business investments in machinery; however, that is set to expire soon.