TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, September 27, 2012

KPMG: U.S. Is #8 in Tax Competitiveness (Down From #6); Cincinnati Is #1 U.S. City

KPMG CoverKPMG has released Competitive Alternatives Special Report: Focus on Tax (2012 Edition):

Our goal in preparing this supplement is to offer a wide-ranging methodology to assess the numerous and complex factors affecting a company’s tax burden, in order to provide a simple and effective approach for cross-location comparisons based on the tax results of different business scenarios.

To this end, this report compares the total tax burden faced by companies in each country and city, including:

  • Corporate income taxes
  • Capital taxes
  • Sales taxes
  • Property taxes
  • Miscellaneous local business taxes
  • Statutory labor costs (i.e., statutory plan costs and other wage-based taxes).

Total tax costs are compared between countries and cities using a Total Tax Index (TTI) for each location. The TTI is a measure of the total taxes paid by corporations in a particular location, expressed as a percentage of total taxes paid by corporations in the US. Thus, the United States has a TTI of 100.0, which represents the benchmark against which the other countries and cities are scored.

The United States ranks 8th in tax competitiveness, down from 6th last year:

KPMG Table 1

The leading U.S. city in tax competitiveness is Cincinnati, which ranks16th: 

KPMG Table 2

(Hat Tip: Joshua LeFevre.)

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I guess rich people care about factors other than low taxes when deciding where to live.

Last time I checked, property values were a lot higher in Manhattan and Greenwich than Cincinnati.

Could it be that if you spend the taxes wisely on things like beautiful parks, bike paths, summer concert series, police, and great infrastructure and / or schools, rich people are willing to pay taxes?

Posted by: Anon | Sep 27, 2012 4:46:19 AM

Cincinnati? That's absurd. I once had a client who lived there. He had to pay city income tax. But sometimes he worked for employers in other cities, and sometimes on jobs that were located in a third city. Sorting out which cities or counties required tax returns, often with only a few dollars owed, was a lesson in why the Rust Belt encourages real people to leave. Competitive for large corporations with accounting departments? Maybe. But not for the people who work for them.

Posted by: Bob | Sep 27, 2012 8:08:36 AM

Given that the tax authorities in Russia may choose to make tax liability pretty much whatever they want, it is a little chancy to give these indices much credence for St Petersburg or Moscow.

Posted by: jmike | Sep 27, 2012 11:30:34 AM